Most people don't know that in 1912,
Hellmann's mayonnaise was manufactured in England. In fact, the Titanic was
carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz,
Mexico, which was to have been the next port of call for the great ship after
its stop in New York. This would have been the largest single shipment of
mayonnaise ever delivered to Mexico. But as we know, the great ship did not
make it to New York. The ship hit an iceberg and sank, and the cargo was lost
forever.
The people of Mexico, who were crazy about
mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the
loss. Their anguish was so great that they declared a National Day of Mourning,
which they still observe to this day.
The National Day of Mourning occurs each
year on May 5th and is known, of course, as Sinko de Mayo.
Today on "Jobs Friday," don't think California has
some pull? It is home to 1 in 8 Americans and its economy is the 6th
largest in the world. It has 58 counties; there are a total of 3,143
counties and county-equivalents in the United States. I mention this not to
give you some trivia for Cinco de Mayo, but to show how narrowly confined the
much-discussed coal jobs are: 50 percent of the U.S. coal mining jobs are in
a mere 25 counties in the United States, and the
number of coal mining jobs roughly equals that of florists in the U.S. (Nothing
against either profession!)
Products
Did you just get a mysterious cube in mail?
I did. The Money Source Inc. sent me this intriguing
package to announce SIME (pronounced Sim-mee) which stands for Servicing
Intelligence Managed Easily. Get a sneak peek at getSIME.com.
In 2015, 28% of underwriters worked remotely
according to the STRATMOR Compensation Connection Survey. STRATMOR believes
the percent of Underwriters working remotely increased in 2016. Did you change
where your Underwriters work in 2016 and how does that compare with your peers?
Participate in our 2017 STRATMOR Compensation Connection to find out. This year
we're digging deeper into benefits to look closer at PTO, Healthcare, 401K, and
Educational Assistance offerings by lenders. The deadline has been extended to
May 15, so don't miss out on your chance to find out how your compensation,
compensation plans and benefits compare to industry standards and peers. To
participate, visit our site. For questions regarding this program,
please contact us at compconnection@stratmorgroup.com.
Nationwide mortgage lender Cardinal Financial Company,
LP, launched its wholesale division and proprietary technology.
"Cardinal Financial's end-to-end digital solution significantly
streamlines the wholesale loan process by improving the loan manufacturing
process from point of sale to close. The company's vision to lead and disrupt the
mortgage industry by modernizing the way home loans are obtained is furthered
by this significant initiative."
Upcoming events
"2017 is an inflexion point for the mortgage
industry, with many unknowns swirling around. To help you make sense of all
these unknowns, String's 2017-Opportunies Webinar is pleased to host one of the
most insightful housing market insiders: Doug Duncan, Fannnie Mae's Chief
Economist, iwill share hisnsights on the current state of the housing
market with a special focus on the current stage of the business cycle
and discussion about whether public policy will extend the expansion,
continuing housing affordability challenges in light of limited new
construction and homes available for sale, and Fed policy and mortgage market
conditions.
Join Garth Graham of STRATMOR Group and Todd Ballenger of
Vantage Production for the webinar Borrower Satisfaction Insights on
Tuesday, May 9 at 1 p.m. ET. Find out why measuring borrower satisfaction
is one of the most critical ways to understand the impact of the loan process
on your business. Click here to register now.
On June 13th at the Jacksonville Community
Center, FHA is offering a free Appraisal Training.On June 14th FHA's
free Underwriting Training is available at the Jacksonville
Community Center.
Bank news
Apparently, we've entered in to bank merger & acquisition
season, if there is such a thing. Things are heating up, which is interesting
as the number of announced mergers this year has declined slightly. S&P
Global Market Intelligence reports the number of banking sector deals for Q1
2017 was 58 compared to 61 (Q1 2016) and 65 (Q1 2015) for the same quarter in
the prior 2 years. And are there green shoots in banking? Bank Director
Magazine reports the FDIC has approved 5 de novo bank applications since 2009
or about 1 per year vs. an average of 154 per year for the 8 years prior to the
crisis.
Just in the last week a whole new slew of bank M&A
announcements came out from around the nation. In California, Central
Valley Community Bank ($1.4B) will acquire Folsom Lake Bank ($200mm) for about
$33.6mm in stock (100%) or about 1.71x tangible book, Bank of the Sierra
($2.0B) will acquire Ojai Community Bank ($257mm) for about $35.7mm in stock
(100%), and Seacoast Commerce Bank ($572mm, CA) will acquire Capital Bank
($306mm, CA) for about $53.6mm in cash (20%) and stock (80%) or about 1.96x
tangible book.
In Kansas First Commerce Bank ($65mm) will acquire The
State Bank of Blue Rapids ($46mm), and Mid-America Financial Corp (KS) will
merge Morgan Federal Bank ($113mm, CO) into Golden Belt Bank ($138mm, KS).
Towne Bank ($8.0B, VA) will acquire Paragon Commercial Bank ($1.5B, NC) for
about $323.7mm in stock (100%) or roughly 2.37x tangible book. South State Bank
($9.0B, SC) will acquire Park Sterling Bank ($3.3B, NC) for about $690.8mm in
stock (100%) or roughly 2.43x tangible book.) National Bank of Commerce ($2.0B,
AL) will acquire Patriot Bank ($155mm, FL) for cash and stock. First Tennessee
Bank ($30.0B, TN) said it will acquire Capital Bank ($10.0B, NC) for $2.2B in
cash (20%) and stock (80%) or about 2.0x tangible book. First Bank ($4.4B, NC)
will acquire Asheville Savings Bank ($795mm, NC) for about $175mm in cash (10%)
and stock (90%).
Things aren't always peachy, of course. BB&T said it
will close 100 branches of its total footprint of 2,193 or about 5% this year.
Bank failures still happen but at a much, much slower pace than in the last few
years. There have been only four this year, but recently the FDIC closed First
NBC Bank ($4.7B, LA) and sold it to Whitney Bank ($25B, MS). Whitney picks up
29 branches, deposits excluding CDs, IRAs and brokered (for a $35mm premium),
and $1B in assets. This is the largest bank failure since 2015 (which was
Doral).
Jumbo news
The average contract interest rate for 30-year fixed-rate
mortgages with conforming loan balances ($424,100 or less) increased to 4.23%
from 4.20%, for 80% LTV ratio loans. The average contract interest rate for
30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100)
increased to 4.18% from 4.15%, for 80% LTV loans. The average contract interest
rate for 30-year fixed-rate mortgages backed by FHA increased to 4.06% from
4.03%, for 80% LTV loans. The average contract interest rate for 15-year
fixed-rate mortgages increased to 3.51% from 3.46%, for 80% LTV loans. The
average contract interest rate for 5/1 adjustable-rate mortgages increased to
3.29% from 3.22%, for 80% LTV loans.
MWF posted a new email address for Jumbo scenarios.
Any questions or scenarios regarding any MWF Jumbo product should be addressed
to: scenariosCU@mwfinc.com
Mountain West Financial has updated and changed
various underwriting guidelines. Effective May 1, 2017 a one-on-one homebuyer
counseling session in addition to the homebuyer education class is required on
its CALHFA program. Changes have also been made to its JUMBO II product which include information on Ineligible
Transactions, Second Home and Investment Properties and Gift of Equity.
MB Financial Bank's Jumbo Enhancements include 90%
LTV Purchase to $1.5 Million, and Non-Owner Occupied to 60% LTV.
NewLeaf announced the new NewLeaf Prime Jumbo and
NewLeaf Prime 90% High LTV Products - QM products that must meet all ATR
requirements. These products are available immediately.
Effective immediately, loans with properties in the state
of California, home to plenty of jumbo loans, are eligible for purchase by Fifth
Third Mortgage Company.
Capital markets
What are bond traders talking about these days? In no
order, the NBA playoffs, overall business spending accelerating in March, the
Stanley Cup, the sharp decline in oil prices, rising unit labor costs,
Wednesday's FOMC statement, a flat yield curve, and the House of Representatives
passing a partial repeal of the Affordable Care Act. (The bill still needs
to get through the Senate, which could be a more difficult undertaking but that
would pave the way for making corporate tax cuts easier to do. And corporate
tax cuts could spur the economy, which in turn typically leads to higher
rates.)
Yes, that's a lot to talk about, but it all conspired to
weigh on bond prices and drive rates higher: as a proxy for other rates, the
10-year T-note worsened .375 to yield 2.36% while the 5-year and MBS prices
worsened .125-.250 depending on coupon and security type.
Do the markets care about unemployment when there is a 90%
chance of the Fed increasing short-term rates at its meeting next month? Yes.
Say what you want about the validity of the numbers, the April employment
numbers came out: nonfarm payrolls (+211k, but March was revised downward), the
unemployment rate (4.4% - strong), and average hourly earnings (+.3%). After
the employment numbers we find rates roughly unchanged versus Thursday's
close: the 10-year is yielding 2.35% and agency MBS prices have barely budged.
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