It is hard to drive by a corner without seeing a gas
station or a bank these
days.
That doesn't mean banks are all huge, especially here in
Colorado, but a few
of them are. The FDIC tells us at the end of March that
there were about
7,000 banks in the U.S., but that the 19 largest banks in
the United States
held 61% of the
$14.42 trillion of assets controlled by all domestic
commercial banks and
savings institutions. Each of the 19 banks has at least
$100 billion of
assets. (It has been several years since a new bank was
formed from
scratch.)
But mortgage banks are continuing to expand. Southern
California's JMAC
Lending, around
since 1997, is searching for wholesale AEs in California,
Nevada, Arizona, Oregon, Washington, Virginia, and
California. JMAC funded
$3.2 billion in 2012, has a full product line-up, and
stresses quality over
quantity for its growing servicing portfolio. JMAC is
also searching for
correspondent partners to originate its jumbo products
(contact Anne Nguyen
on JMAC's jumbo program.) For more information on JMAC,
visit JMAC
[http://r20.rs6.net/tn.jsp?e=0014oCYsUPFmVV6qjv9S9D2ORHl9vynsPhRkpFv4O6rAN3x
HIZhPt09_3Wo3EIpbEwdMrGF9ycmsqSesqqxdXbyB-M_lKxMqo87q3f_2jTt2SDVIQiukm29XCrG
PCV_zXgj]
and to submit a confidential resume, or for more
information, contact
And Fairway Independent Mortgage Corp. is searching for a
VP/AVP of
Secondary Marketing.
This position, located in Illinois, is primarily
responsible for managing
the risks associated with Secondary Marketing including
pipeline and
interest rate risk management, pricing, hedging, trading,
and loan sales to
maximize profitability. The candidate will evaluate
current methods for
managing risk and Secondary Marketing operational
processes and makes
recommendations, and will be responsible for loan sales
including servicing
retained, servicing released, correspondent investor
AOT/DTs, Agency whole
loan cash sales, co-issue transactions, and specified
pools; including
issuing Fannie, Freddie, and Ginnie securities. The ideal
candidate should
have 5-10 years secondary marketing experience,
experience issuing Fannie,
Freddie, and Ginnie securities, and a solid knowledge of pricing structures
and interest rate risk management.
Fairway's production in 2012 totaled $6.0 billion. For
questions, to see a
full job description, or to submit a resume, please
contact Mike Blake at
Here's a quick compensation tidbit. Often, the branch
manager is the biggest
producer in the branch and according to the STRATMOR
Compensation Survey,
about 40% of branch manager pay in 2012 was incentive on
personal
production. Branch managers are most often paid on the
same tiers as Loan
Officers for personal production and then an override on
other branch
production. (For more information about branch manager
compensation, contact
No one wants to be mentioned in a speech given by Richard
Cordray, but
Castle & Cook's Matthew Pineda and Buck Hawkins were.
The Consumer Financial
Protection Bureau filed suit in federal court against
Utah's Castle & Cook
Mortgage, alleging it steered customers into higher
interest rate loans,
based on resulting bonus incentives, violating rules put
into place back in
2011. The CFPB is not pushing for C&C (22 states, $1.3 billion in 2012) to
exit the business, but has asked the court to end the
firm's loan officer
compensation practices and to provide restitution along
with civil
penalties. The CFPB claims Castle & Cooke, as well as
Pineda Hawkins,
violated the Federal Reserve's loan originator
compensation rule, which had
a compliance date of April 6, 2011. The rule prohibited
compensation based
on loan terms, including those that adjust pay for higher
interest rates.
Bureau investigators claim Castle & Cooke's quarterly
bonus program violated
this rule by paying 150 loan officers higher levels of bonus compensation
for distributing more expensive loans. How much are we
talking?
In a statement, the bureau wrote: "The average
quarterly bonus ranged from
$6,100 to $8,700. By contrast, those loan officers who
did not charge
consumers higher interest rates did not receive quarterly
bonuses. The CFPB
estimates that more than
1,100 illegal quarterly bonuses were paid and that tens
of thousands of
customers may have been upsold since April 2011."
The CFPB also alleged Castle & Cooke violated a rule
forcing companies to
retain compliance
records for a certain period of time. The bureau claims
Castle & Cooke failed to record what portion of each
loan officer's
quarterly bonus was the result of a particular loan being
issued. Here is
what the public sees: HomeTownNews
[http://r20.rs6.net/tn.jsp?e=0014oCYsUPFmVVk6S8wbAtMX6wpE07IMvFLX9HreH7WbjM0
ANVHlUcjaMPG6o3BSBCm-UDoDtoCntHz9fQ6crdcqobGhSU1Y5ekglH55r_56MWKqm1UW9Sc6vbD
BRwulX5ZESGKplvCmY_6roUoWgRuDNbWKqw1ptyqBFD_cn4w0FEHWlObgx-XVft6knjPZxzXLLtf
1Z0Fk4Ybm5lFZuavZw==],
and here is the CFPB release
[http://r20.rs6.net/tn.jsp?e=0014oCYsUPFmVVIaMe8MJvlkacIH9uZEDx8NUzlaLCsYlpw
uFJVwbljYjTGv5ViX2mSPadMx1qjKSG97Evznsj6ZtiCNs9zjGN1HUJJpoc7emV8sjuNrzZlTbSM
2xkslHqnL3qt421ClfCSqtRqai0f8vBJMyjRHK7PqXSGesProQjRIGYQTDYC5OTwbfPljUfWTFAg
0oVOadbQVX6hR-GzOArcoUVIEZnodOr28FbECYEU3ky846bzHMdu6R9MSjrF_lAtiDw-HkPlpfbR
WKo8WEGJzyaExJp1].
"Rob, is there anything wrong with me paying my LOs
70% of what they're owed
on a loan, and then spreading the remaining 30% out over
their next few
closings?"
As always, I recommend speaking to an attorney that
specializes in
compensation.
In my uneducated
opinion, putting a portion of the LOs compensation into a
"bank"
and then spreading it out over the next few fundings is
indeed something I
have heard of, and it is probably legit.
Here's an interesting development. "Rob, have you
heard of a new position:
'Director of Marketing'? Supposedly companies, in
avoiding the LO name, have
created a position whereby unlicensed loan officers,
often high volume
originators, are moving from banks to the non-banking sector. They do not
discuss interest rates, but perform all other
duties." First, no, I have not
heard of this position. And second, in my opinion, the
long term prospects
are slim of companies "trying to get around"
some regulation or
legal verbiage.
New residential applications continue to decline. The MBA
reported that last
week apps were down 1.2% from a week earlier. The
refinance index fell 1%
from a week
earlier to reach its lowest level in two years, driven by a 12%
decline in the government refinance index while the
conventional refinance
index rose 2%. (Purchases were down 2 %.) Refi apps were
unchanged at 63% of
all apps, ARMs were 7%.
The headlines, besides a royal baby preparing to make an
appearance, show
that BB&T and Fifth Third saw record residential
mortgage production during
the 2nd quarter, in addition to great results from Wells
Fargo, Chase, and
Bank of America. That is very good news, but the markets
notoriously look to
the future, and analysts are concerned about the 3rd and
4th quarters. KBW,
a Stifel company, viewed JPM's mortgage results as
better-than-expected,
while WFC's results were somewhat mixed.
"JPM's gain-on-sale margin was up quarter over
quarter, increasing 31 bps to
2.62% from 2.31%, and the net mortgage banking margin
(which includes
expenses) increased
38 bps to 1.19% from 0.81%. Wells Fargo's gain-on-sale
margin declined 35
bps to 2.21% from
2.56%, which is more in line with what we are expecting
for the industry.
JPM's mortgage origination volume of $49 billion was down
7% QoQ and WFC
reported volume of $112 billion, up 2.8% QoQ. We are
generally expecting
moderately lower
volumes for the industry, while the Mortgage Bankers
Association (MBA) is forecasting that industry volumes
will be up 2.5% QoQ.
WFC noted that its application pipeline of $63 billion at
quarter end was
down from $74 billion at March 31. WFC reported that
purchase applications
increased to 46% from 35% in 1Q, suggesting that purchase
applications on a
dollar basis were up 37%."
But there is some good news out there. First, MGIC
Investment Corp. posted
its first quarterly profit in three years. MGIC is the
second-largest U.S.
private mortgage insurer, and it, and the other MI
companies, has benefited
as fewer people defaulted on their home loans: the number
of delinquent
loans fell 24 percent in the second quarter to their
lowest level in five
years. (And, of course, all the MI companies are
increasingly grabbing
market share from the Federal Housing
Administration.) The last profit that
MGIC reported was from early 2010, and its recent
cumulative loss is $5.3
billion.
Second, Radian announced that it has seen improved
financial results in the
quarter and the first half of the year. Chief Executive
Officer S.A. Ibrahim
reported, "Compared to the second quarter of last
year, our new mortgage
insurance business written grew 60% and we reduced our
inventory of primary
delinquent loans by 21%.
The loss ratio for our mortgage insurance business
was approximately 70% for the second consecutive quarter,
and the mortgage
insurance loss provision for the first half of 2013
reached its lowest level
since the first half of 2007." Radian, however, did
report a net loss for
the 2nd quarter of $33.2 million. S.A. continued,
"Also in the second
quarter, we achieved an important milestone with our high
quality,
profitable new business written after 2008 now
representing 53% of our
primary risk in force, outweighing our legacy mortgage
insurance book. This
improved composition has helped our mortgage insurance
business achieve
profitability, absent the impact of fair value gains and
losses, for the
quarter and six months."
The third piece of good news, kind of, is a report from
the Wall Street
Journal that regulators "are preparing to
relax" the QRM ("skin in the
game") rules. The
MBA and others want QRM, if it happens at all, to match
existing QM rules. "The watchdogs, which include the Federal Reserve
and
Federal Deposit Insurance Corp., want to loosen a proposed
requirement that
banks retain a portion of the mortgage securities they
sell to
investors...Advocates of more stringent standards said
that a broad
exemption to the risk-retention rules would undermine the
initial goal of
imposing market discipline. 'My sense is that Washington
has lost its
political will for serious reform of the securitization
market,' said Sheila
Bair, who served as FDIC chairman until 2011." The
industry has been
concerned, since Dodd-Frank stipulated that issuers
should retain 5% of all
mortgage-backed securities issued without government
backing. "The idea was
to ensure that the firms had 'skin in the game,'
addressing problems that
arose when lenders didn't pay close attention to the
quality of loans issued
as securities so long as the bonds could receive triple-A
ratings. But
Congress also created an exception to the
skin-in-the-game requirement.
Lawmakers directed six regulators to specify certain
loans-such as
traditional 30-year, fixed-rate mortgages-that wouldn't
be subject to the
new rules.
At issue now is how to define this so-called qualified
residential
mortgage."
Asking any lender to set aside, or keep, 5% of whatever
it securitizes would
freeze the industry - the intent is good, but for a small
or midsize lender
to, for example, have $50k in cash for every $1 million
in jumbo loans it
produces would be game-changing.
But there is talk that banks would have to retain 5% only
of mortgages that
allow borrowers to make "interest-only"
payments or that don't fully
document a borrower's ability to repay a mortgage-a much
smaller portion of
the market that includes the riskiest loan products that
caused much of the
crisis-time losses. Reporters Nick Tirimaos and Alan
Zibel noted, "To be
exempted those loans would still have to meet other
standards issued earlier
this year by the Consumer Financial Protection Bureau on
Dodd-Frank's
requirements that banks ensure a borrower's capacity to
repay a mortgage."
There has been plenty to criticize: the complexity of the
new rules would
likely raise costs
for lenders and consumers, costs and restrictions will
dampen any housing recovery, there is a good argument
that down-payment
standards should be set by the market and not by
regulators, and so on.
Opponents have argued that shoddy loan products and
lenders' carelessness in
determining a borrower's ability to repay a loan-not down
payments-were
bigger contributors to the mortgage crisis.
Any market chatters pales in comparison to all this news.
The Fed is
continuing to buy agency MBS, originator volumes continue
to be "below
normal" - but it is easy to argue that there is a
new normal. (That being
said, traders reported that volume was just 68 percent of
the 30-day moving
average, coming in at $1.2 billion consisting largely of
30-year 4%
securities.) At the end of the day MBS prices were worse
about .250, and the
10-yr T-note was down about the same and closed at a
yield of 2.52%.
Don't look for a big move today either: besides company
earnings coming in,
the only news will be New Home Sales (expected to
increase about 1%). That
being said, rates have crept up a little, and the 10-yr
is sitting around
2.56%, and MBS prices are worse about .125, based on some
decent earnings
news.
The mother-in-law arrives home from the shops to find her
son-in-law boiling
with anger and hurriedly packing his suitcase.
"What happened?" she asks anxiously.
"What happened!!
I'll tell you what happened. I
sent an email to my wife
telling her I was coming home today from my fishing trip.
I get home... and
guess what I
found? Yes, your daughter, my
Rachel, with a naked guy in our
marital bed! This
is unforgiveable, the end of our marriage. I'm done. I'm
leaving forever!"
"Calm down, calm down!" says his
mother-in-law. "There is something
very
odd going on here. Rachel would NEVER do such a
thing! There must be a
simple explanation.
I'll go speak to her immediately and find out what
happened."
Moments later, the mother-in-law comes back with a big
smile on her face.
"I told you there must be a simple explanation - she
didn't receive your
e-mail!"
If you're interested, visit my twice-a-month blog at the
STRATMOR Group web
[http://r20.rs6.net/tn.jsp?e=0014oCYsUPFmVW3M3E5FFK_FHnZ7JZrQnSn7dtnJ9tzffJk
GOO956XU39wQl7chnwaTSkth6Tu0YEeD5LrK33q3CavQZBMZNJF2dR_qbMVKkQ9MBRSmu-R00d65
Xd2Vbog9].
The current blog is, "A Little Technical Knowledge
About REITs." 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?e=0014oCYsUPFmVXj8jCrCTI1B2jFYGUTpqJEBU2MDD7cQB5t
Y5LlARf86ZZGMez8GLsgaVUDK15opjSxaPCesB7FGvBSJ1IDbbQgdZu8bo87FRwWJNm3OLsqAZdD
qHkRlUY-7EuC_g6FLPdhbgmCtdXFO1PoC6jq9P9zI5sDXc-Vy-MzngTrrjjuRw==]
[http://r20.rs6.net/tn.jsp?e=0014oCYsUPFmVVM_mvHjFz4EgNRa6WMi7kycav5LhtWCfrp
E9YjipAIFCF8WCQm32QYLKt2itdeZOL2B2ltx6APt_xx5KS_pBA2ynmZ_4jOSV4HfOIQc9iaAeAE
cEqpMdQdZ_yxl5awjAbvs9y4YoOg3yr2tqHmEfEq].
[http://r20.rs6.net/tn.jsp?e=0014oCYsUPFmVUSrst_UPUhOlY53TuFFvCQAMcwNv4_-hqK
RfDYslTHzKw7U9WLsJDMydGex2I7vi53fNEx6LUrpMVXoe2tlss0FRiu-VhEITqLLBZWNHEsZHYW
cLm9-JAS].
Copyright 2013 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.)
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