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Here's some good news for some: The Financial Times reports that, "The
Federal Reserve is this week expected to pave the way for a doubling of bank
dividends and share buybacks when it unveils the results of stress tests on
the largest US financial groups. If Citigroup passes the test, as expected,
it will be in a position to pay more than a notional 1 cent a share dividend
for the first time since the financial crisis...Analysts expect JPMorgan
Chase, among the strongest of international banks, to pay more than 70 per
cent of its earnings in the form of dividends and share buybacks, close to
pre-2008 levels." Anecdotally, I was in a group a few weeks ago that John
Stumf of Wells Fargo addressed, and he was practically giddy about its
stock price and dividends...
And there is good news on the hiring front: a $2 billion Mortgage bank in
Northern California is looking for a SVP of Compliance. This position will
be responsible for developing risk management policies and advising company
leadership of new and changing regulatory risks; developing and implementing
company's policies and procedures for compliance based on all federal
regulations and state laws , including Financial Reform, NMLS, SAFE Act,
AIR, MDIA and RESPA Reform; managing all federal, government, and/or state
applications for licensing, lending and/or brokering for company and
affiliates; and coordinating internal compliance review and monitoring
activities. Resumes should be sent to me at rchrisman@robchrisman.com
And in Southern California, JMAC Lending is looking for experienced
underwriters and funders for its Irvine location. JMAC has been around for
over twenty years, and has expanded operations to include licensing in seven
states. For more information about the company, visit www.jmaclending.com
[http://r20.rs6.net/tn.jsp?et=1109506847027&s=8721&e=001Mxa3V8gbtUmDafto3RrH
yv9QHXqwmDe75ctXTas6sBkGGINjaFLZkpPlWfg_buSlusVjg7rBe9uGzqSfonWfTQb0EUReNpPF
2Hzp7WDnTrZjrI08XNtsaA==],
and resumes should be directed to career@jmaclending.com
Freddie Mac announced that it has posted a net income of $619 million for
the quarter ended December 31, 2011 and total comprehensive income of $1.5
billion. For the entire year of 2011 Freddie Mac had a net loss of $5.3
billion and comprehensive income of $(1.2) billion compared to $(14.0)
billion and $0.3 in 2010. The shift from a net loss to a net gain in the
fourth quarter reflects lower derivative losses due to a smaller decline in
long-term interest rates and a decrease in the provision for credit losses
on single-family loans. Freddie had a net worth deficit of $146 million at
the end of the quarter and will submit a request to the Treasury Department
for a draw in that amount. This will be more than offset by a quarterly
dividend payment of $1.7 billion to Treasury on its holdings of Freddie Mac
Senior Preferred Stock. With this draw Freddie Mac will have received $7.6
billion from Treasury for 2011 and paid $6.5 billion in dividends. For
those playing along at home, since August 2008 Freddie Mac has drawn $72.3
billion from Treasury and paid dividends of $16.5 billion.
Overall in 2011 Freddie financed 1,859,072 residential properties of which
320,753 were multi-family units, down from 2,115,302 mortgages in 2010. In
its release Freddie noted that the loans it acquired after 2008 accounted
for only 1% of its credit losses while loans originated between 2005 and
2008 represent 90% of those losses (with nearly a 9% delinquency rate).
Multifamily originations by FNMA and FHLMC are at record highs, indicating
that the rental market is indeed strong. Sales of properties totaled $3.8
billion in January, a 53% increase from a year earlier, with rates for this
type of product in the low 4% range.
(Turning to underwriting for a moment -most updates were posted in the
Saturday commentary - LO's are especially interested in the fact that Fannie
has recently updated DU to include when a loan is over 75% LTV and the DTI
is greater than 45%, DU is now asking for 12 month reserves. In a split,
however, Freddie Mac has not made this same change to LP. So one can expect
LO's to take advantage of this on a small number of loans if they can go to
both agencies.)
Fannie announced an initiative to make loan-level data for single-family MBS
accessible as a move towards transparency. The agency will start releasing
loan-level data beginning the first quarter of 2012 and will provide data
updates regularly. Obviously investors in agency MBS, and all MBS, want to
know what they're buying, and this is another step in the direction of
restoring investor confidence. The first release of loan-level data files
for single-family MBS will be downloadable and published under the "New
Issues Statistics" tab in PoolTalk, which is a tool that retrieves
pool-level information and data on Fannie Mae securities. Concurring with
the release of the loan-level data will be new features on PoolTalk,
including the ability to view data on a specific pool and monitor data for
specific securities at a glance.
Daily issuance files, month statistics, and MBS-related documents will be
accessible through PoolTalk.
But the top 70 executives at F&F were told by the FHFA that their salaries
would be limited to $500,000, and bonuses would be eliminated. The change
came after Congressional leaders ridiculed the high million-dollar salaries
of many executives at the two firms. No date has been set for when the pay
changes will go into effect.
Many believe that no member of Congress wants anyone related to government
to earn more than they do - maybe they should check out the Cal football
coach's salary of over $2 million.
The industry continues to ruminate on the Fannie-Bank of America rift.
Attorney Phil Stein writes, "Now, Fannie Mae is pressuring lender Bank of
America to cover losses incurred by insured home loans that have defaulted,
but on which the PMI company is refusing to pay. Bank of America, to its
credit, is resisting these demands, perhaps weary (and wary) of making such
payments after having already entered into a multi-billion dollar settlement
with Fannie only a little more than one year ago."
Mr. Stein continues: "But the kudos to BofA end there. It is notable to
those of us who regularly represent correspondents that BofA is not merely
refusing to repurchase additional loans from Fannie, but is doing so on the
grounds that there was no adequate reason for the PMI companies to fail to
pay out mortgage insurance when these loans defaulted. This is consistent
with the stance that BofA took as early as its lawsuit against MGIC, but
BofA nevertheless routinely makes repurchase demands to correspondents based
on the mere fact that PMI has been rescinded (whether it has been rescinded
rightly or wrongly is of no particular concern to BofA in such cases). This
is yet another important instance of BofA taking public positions that are
directly contrary to its assertions when it makes buy-back demands on
correspondents. Correspondents can use this inconsistency to their distinct
advantage in contesting demands made by BofA. It is also interesting,
incidentally, that Fannie has now claimed that it cut off purchases from
BofA, rather than BofA deciding to stop selling to Fannie.
While they sort out who broke up with whom, let's hope that the
correspondents will be given a well-deserved respite from BofA's unfounded
buy-back demands." (If you'd like to follow this and other mortgage legal
issues, Phil's writings can be found at www.mortgagecrisiswatch.com
[http://r20.rs6.net/tn.jsp?et=1109506847027&s=8721&e=001Mxa3V8gbtUkXsEi4bwH7
1tGMTVFktqIqiqrXmt1DrYUQdYHeCvEAHGrJ067in5ueU9N7QGEfcXrJ8UqpYksoREFu42u59bU7
x5nrUfIPCKIRC84qeCdhd28j22iHXfbC].)
Legal issues are now a fact of life in mortgage banking and real estate. The
Supreme Court has heard oral arguments on whether or not splitting an
unearned fee violates the Real Estate Settlement Procedures Act (RESPA). The
case is Freeman v. Quicken Loans, and is intended to settle a dispute among
the federal circuit courts regarding the statutory interpretation of Section
8(b) of RESPA which prohibits giving or accepting "any portion, split, or
percentage" of any charge for settlement services "other than for services
actually performed." The issue in Freeman is whether Section
8(b) applies to an unearned fee charged by the loan originator. Quicken
Loans charged the borrower discount points which did not go to reduce the
borrower's interest rate, and the borrower claims the charges are unearned
and not for services actually performed. All agree that if the fees were
split with a third party, the arrangement would be illegal under RESPA. In
this instance, however, Quicken Loans did not split its fees with a third
party. Will the Supreme Court accept Quicken Loans' argument that if
Congress had intended to hold settlement service providers in violation of
the Act for charging an unearned fee, it would have clearly said so (as it
has done in other instances) or will the Court find that the charging of
unearned fees violates the Act whether those fees are split between two
parties or kept in their entirety by the lender? Stay tuned for June, when
the decision is expected.
Friday was a good day for MBS prices, prompting one veteran trader to note,
"Mortgages were harder to keep than a Lindsay Lohan court date." But it's
Monday again, which means we have a week of economic data to chew upon.
There is zip for today, tomorrow is Retail Sales, Business Inventories, and
an FOMC meeting adjournment (no change to overnight rates expected),
Wednesday is Import & Export Prices, Thursday the usual Jobless Claims but
also the Producer Price Index, Empire Manufacturing, and the Philly Fed
survey. Friday is the Consumer Price Index, Industrial Production &
Capacity Utilization, and a University of Michigan survey. In the early
going, the U.S. 10-yr, which closed at 2.04% Friday, is coming in around
2.01% and MBS prices are about .125 better than Friday's close.
An Australian, an Irishman and an Englishman are in a bar. They're staring
at another man sitting on his own at a table in the corner.
He's so familiar, and not recognizing him is driving them mad.
They stare and stare, until suddenly the Irishman twigs: "Holy smokes, it's
Jesus!"
Sure enough, it is Jesus, nursing a pint.
Thrilled, they send him over a pint of Guinness, a pint of Fosters and a
pint of bitter.
Jesus accepts the drinks, smiles over at the three men, and drinks the pints
slowly, one after another.
After he's finished the drinks, Jesus approaches the trio.
He reaches for the hand of the Irishman and shakes it, thanking him for the
Guinness.
When he lets go, the Irishman gives a cry of amazement: "My God! The
arthritis I've had for 30 years is gone. It's a miracle!"
Jesus then shakes the Aussie's hand, thanking him for the lager.
As he lets go, the man's eyes widen in shock. "Strewth mate, the bad back
I've had all my life is completely gone! It's A Miracle."
Jesus then approaches the Brit who says, "Back off, mate, I'm on disability
benefit."
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=tj7f7jjab.0.epg7qedab.zy6u9cdab.8721&ts=S0744&p
=http%3A%2F%2Fwww.mortgagenewsdaily.com%2Fchannels%2Fpipelinepress%2Fdefault
.aspx]
[http://r20.rs6.net/tn.jsp?t=tj7f7jjab.0.v7uif6dab.zy6u9cdab.8721&ts=S0744&p
=http%3A%2F%2Fwww.thebasispoint.com%2Fcategory%2Fdaily-basis].
For archived commentaries, go towww.robchrisman.com
[http://r20.rs6.net/tn.jsp?t=tj7f7jjab.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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