A little boy got lost at the
YMCA and found himself in the women's locker room. When he was spotted, the
room burst into shrieks, with ladies grabbing towels and running for cover.
The little boy watched in amazement and then asked, "What's the matter,
haven't you ever seen a little boy before?" There are a lot of
interesting comebacks out there, not the least of which is that the value of
US pensions has soared this year: per JPMorgan Chase, pensions now cover
96% of future obligations! Pension values have
seen the biggest improvement in 25 years - funding levels were in the high
70%s as of the end of last year. The news could get even better in 2014
if bond yields rise. This is good since Baby Boomers (1946-1964) are now
retiring at the rate of 8,000 per day and this is expected to increase as
more enter their retirement years. (Of course, no one ever truly retires from
our business, right?)
With rapid lending growth
over the past several years, Metro Credit Union is now looking
to hire an experienced Vice President of Mortgage Origination who will be
responsible for directing all real estate lending origination initiatives and
managing internal and external sales teams. "In the last 18 months alone
we have seen 38% growth in loan portfolio balances across mortgages, home
equity, business and their other lending areas." stated Thomas W.
Nadeau, SVP of Lending & COO. "Our business lending alone has grown
45%." Since 1926, Metro has been
providing financial services to communities throughout Massachusetts. Its
array of products, including niche programs, is coupled with a solid mortgage
operation and major contributors to business growth and member loyalty. See
the open position here.
And out west, Peoples
National Bank in Colorado is looking to recruit top-notch mortgage bankers
and acquire retail production groups, particularly in the Rocky Mountain
region. Peoples "offers
the best of both worlds, a solid national bank platform and an aggressive
mortgage sales operation that has been in the business more than 30 years and
did more than $1 billion in residential production in the past two
years." Peoples is open to expansion almost anywhere but is
targeting the Denver, Phoenix and Salt Lake metro areas. E-mail President
Steve Stingley at sstingley@epeoples.com
for confidential inquires or to submit resumes.
"We remain optimistic
that home sales, new home construction and home prices will all continue to
improve in the coming year, even though conditions will be more challenging
on a number of fronts," so says Wells Fargo's
Economics Groupin a recent Housing Chartbook. I hope
they're correct. According to the publication sales and construction are
still being held back by the aftershocks of the housing bust, which have
reduced buyer power and led to more restrictive lending criteria. Land
development also faces greater constraints and less public support than it
has in the past. Demographics are also changing in a way that is boosting
demand for rental units and active adult housing but is also restricting
demand for first-time home buyers, trade-up purchases and second homes.
Wells' conclusion: in this environment, housing starts will continue to
struggle to regain their long-term average of around 1.5 million units a
year.
For anyone involved in a California
short sale there is some good news. On December 5th the California
Board of Equalization (BOE) announced that despite a failure to pass
extensions of either the federal or state mortgage debt forgiveness law, the
BOE will conform to IRS regulation, and income from a short sale (on
non-recourse loans) will not be treated as taxable. In a September letter submitted
by George Runner of the BOE to the Franchise Tax Board's Chief Counsel Jozel
Brunett, in which Mr. Runner requested a legal opinion as to the potential
tax consequences for a California resident who completes a short sale under
existing California law, Mr. Brunett replied, "Since
California conforms to the relevant portions of the federal tax law governing
the forgiveness of non-recourse and recourse indebtedness, California would
follow the federal treatment for the CCP section 580e transactions." A
legislative effort to extend tax protection for California short sales
derailed this year. However, the Franchise Tax Board's announcement that it
will conform with the IRS ensures continued protection for taxpayers without
the need for legislation.
In October Massachusetts
recently amended 209 CMR 18, "Conduct of the Business of Debt Collectors
and Loan Servicers", in order to further clarify and establish standards
of conduct for debt collectors and third party loan servicers. The biggest
impact to 209 CMR 18 is the addition of Section 18.21A "Mortgage Loan
Servicing Practices". A third party loan servicer may not use unfair or
unconscionable means in the servicing of a mortgage loan and this section
outlines examples of conduct which will result in a violation. Bankers
Advisory writes, "Third party mortgage loan servicers must comply
with additional requirements regarding the right of a borrower to cure
default, loss mitigation options and evaluation requirements, and loan
modification requirements prior to foreclosure among other foreclosure
related servicing requirements." Section 18.21A also outlines the
requirements where a third party servicers is acting on behalf of the
mortgagee in providing foreclosure affidavits or sworn statements and
certifications. The complete and official amendments, which went into effect
on October 11th, can be found here.
Iowa recently
amended, and made revisions to, specific code provisions relating to public
funds, state banks, debt management services, the Uniform Money Services Act,
currency exchanges, delayed deposits, mortgage licensing, professional
engineers and land surveyors, real estate brokers and salespersons,
appraisers, and architects. The changes focus on licensing requirements,
education and examination of various license applicants, and the powers of
the Board of Appraisers. Bankers Advisory Inc has a complete
section-by-section here.
We have 17 business days
left until QM is official. Information continues to flow into the
marketplace, although by now most companies are nearly compliant. The
American Mortgage Law Group & Allregs have compiled an additional
bulletin and FAQ documentation on
the upcoming myriad of regulation changes. If you have
additional questions, please email marketing@allregs.com and your email will be answered
directly by the speakers. The recording of the most recent webinar is
available here. And to
access supporting documentation for this webinar, please visit documents.
Through the end of September
we'd only had 22 banks fail; the 24th was shut down on Friday. Texas Community Bank, National Association, The
Woodlands, Texas, was closed, and Spirit of Texas Bank, SSB, College Station,
Texas, assumed all of the deposits. This year, per the FDIC, the first 21
bank failures cost the Deposit Insurance Fund (DIF) $512 million. The 22nd
bank failure (The National Bank of El Paso) cost the DIF $637.5 million or
more than the collective failures of all previous 21 takeovers in 2013.
And there is plenty going on
inside of banks, and with mergers and acquisitions. Hovde research finds that
since 2000, bank sellers over $1 billion in assets have captured a 32%
premium over those with assets less than that. Meanwhile, selling banks in
metropolitan MSAs over the same time period have captured a 19% premium over
banks in rural areas.
In recent bank M&A
news, Mascoma Savings Bank ($1.1B, NH) will acquire Connecticut River
Bank ($285mm, VT) for $26.7mm in cash. Community Bank ($7.3B, NY) will
acquire the professional-services practice from Lifetime Healthcare for an
undisclosed sum. The practice provides medical-benefit valuation and
consultation services to 150 companies. Spanish Bank Banco de Sabadell SA
will acquire JGB Bank ($530mm, FL) from Columbian billionaire Jaime Gilinski
Bacal for about $56mm or roughly 1.12x book. Volunteer Corporate Credit Union
($1.0B, TN) will acquire Kentucky Corporate Federal CU ($153mm, KY). First
State Bank ($348mm, NE) will acquire Community Bank ($51mm, NE) in an
all-equity deal that would combine both banks. The banks are owned almost
entirely by the Randecker family. Apollo Bank ($257mm, FL) will acquire First
Bank of Miami ($198mm, FL) for an undisclosed sum. Bank of the Ozarks ($4.7B,
AR) will acquire Omnibank ($301mm, TX) for $23mm in cash or about 0.75x book.
SunTrust Bank announced
it will sell its asset management subsidiary, RidgeWorth Capital Management,
to RidgeWorth employees and an investor group for up to $245mm. RidgeWorth
provides support to boutique money managers in areas that include trading,
compliance, technology, accounting, distribution and marketing.
Pacific Mercantile Bank, a
wholly-owned subsidiary of Pacific Mercantile Bancorp, is exiting the
consumer mortgage origination business. The bank, with seven
locations in Orange, San Diego, Los Angeles and San Bernardino counties,
expects to sell or end its mortgage banking division to focus on its mission
to become a prominent business banking franchise, Steven Buster, president
and chief executive of Pacific Mercantile Bancorp said in a statement.
"We made the strategic decision to exit the consumer mortgage
origination business due to the operating performance of the unit and the
bank's desire to focus on continuing to develop the commercial banking
opportunity in its marketplace," Buster said. Pacific's consumer
mortgage division will stop accepting new applications on or about Dec. 20.
And change is constant: TCF
National Bank ($18.4B, SD) will close 37 bank branches in Jewel-Osco
stores in Chicago to address customer migration away from traditional retail
banking to mobile, ATMs and online. TCF also announced it would be adding 52
ATMs to Chicago Transit Authority train stations around the city.
As part of its QM and ATR
preparation, Wells is revising the qualifying rate requirements for
7/1 and 10/1 ARMs to be calculated as the greater of the fully indexed rate
or the initial note rate, effective as of January 10th.
Chase is
expanding the Chase Legal review of inter vivos revocable trusts, which
should be submitted to Chase Customer Support; however, the credit file
should still go to underwriting. This is available only for Agency and
non-Agency non-delegated loans.
In order to align with Agency
guidelines, Chase has expanded the maximum LTV/CLTVs for Agency ARMs with
Accept/Eligible findings in LP, FNMA Fixed Rate 2-Unit Primary Purchase
transactions, and FHLMC Fixed Rate 1-Unit/Condo/PUD Non-Owner Occupied
Purchase transactions. The Agencies' new LLPAs for cash-out LP Conforming
ARMs with expanded LTVs will apply as well. Applicable loans with an LTV
between 75% and 80% will incur an adjustor of -1.250 for FICO scores between
700 and 739 and -.500 for scores of 740 and over.
Turning to the markets, we
finished Friday with the market thinking that yes, we can all expect the Fed
to taper off buying fixed-income securities, but still we don't know when,
but even when it does scale things back, the world will not end and rates
won't go up 2%. In a Reuters' poll of 63 economists conducted after Friday's
employment report, 14 percent of those polled expected tapering to be
announced in December, 30 percent in January and 52 percent in March. This
compared to odds of 5 percent for December, 26 percent for January and 69
percent for March in a poll conducted a couple of weeks prior to that. Supply
from mortgage bankers has been averaging $1 billion per day while the daily
pace of Fed buying has been $2.7 billion.
Of more importance to
individual borrowers was the FHFA announcement late Monday regarding changes
in guarantee fees, including a 10 basis points increase in the base g-fee for
all mortgages effective April 1, 2014 for loans exchanged for MBS and March 1
for loans sold for cash. We also had the Senate vote confirming Rep. Mel Watt
as FHFA Director. Investors are worried that Watt will expand HARP in various
ways including extending the cut-off eligibility date and offering principal
forgiveness.
We have a lot going on this
week. Today is the Industrial Production & Capacity Utilization duo.
Tomorrow is the Consumer Price Index. Wednesday, December 18th,
Federal Open Market Committee (FOMC) will announce its views on the economy
along with information regarding QE3 and potential changes in policy rates or
asset purchases. Prior to that we'll have the Housing Starts & Building
Permits duo, followed by Thursday's Existing Home Sales, Philly Fed, and
weekly Jobless Claims numbers. Friday, December 20th, Gross
Domestic Product (GDP) will measure the total output of the country's
production. We'll also have the Treasury auctioning off $112 billion in 2-,
5- and 7-year notes and 5-year TIPS beginning Tuesday through Thursday.
Looking at actual numbers, the risk-free 10-yr note closed Friday with a
yield of 2.87% and is now down at 2.85%; MBS prices are a shade better.
Students in an advanced
Biology class were taking their mid-term exam. The last question was,
"Name seven advantages of Mother's Milk." The question was worth 70
points or none at all.
One student, in particular,
was hard put to think of seven advantages. However, he wrote:
1) It is the perfect formula
for the child.
2) It provides immunity
against several diseases.
3) It is always the right
temperature.
4) It is inexpensive.
5) It bonds the child to
mother, and vice versa.
6) It is always available as
needed.
And then the student was
stuck. Finally, in desperation, just before the bell rang indicating the end
of the test, he wrote:
7) It comes in two attractive
containers and it is high enough off the ground where the cat can't get it.
He got an A.
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 or www.TheBasisPoint.com/category/daily-basis. For archived commentaries or to subscribe, go to www.robchrisman.com. 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.)
What is on the agenda for this week?
This could be a very pivotal week. First, lets address this morning's early data. We had a mixed bag of news. Productivity rose and Unit Labor Costs dropped. This is great for bonds....making for stuff without increasing costs is a treat for bonds because it keeps inflation at bay. But Industrial Production and Capacity Utilization both rose which means that manufacturing and the economy are heating up which is negative for bonds. The end result was that bonds were largely unaffected by the data. While we do have some big economic reports this week, MBS pricing (and therefore mortgage rates) will be reacting to Washington and to the Federal Reserve not to the data. This week is all about Wednesday's Federal Open Market Committee (FOMC) announcement. Wednesday concludes two days of meetings and the FOMC will announce their policy statement and interest rate decision. Of course there will be no change in their interest rate. But the focus will be on Bernanke's last press conference as the Fed Chair and any announcement on reducing the monthly rate of their asset purchase program or at the very least, some guidance on the timing of their taper. This will provide momentum for bond pricing for the next month and the importance of this event cannot be overstated We do have some shorter-term Treasury auctions this week: 12/17 2 year note 12/18 5 year note 12/19 7 year note MBS are getting a lift this morning on news that the budget deal that the House passed does not have enough votes in the Senate at this time. Passage of a 2 year budget is widely believed to be the last piece of the puzzle that the Fed needs to taper at this meeting. But, MBS are now trading above our 10 day moving average and actually closing above that level will be tough. Clearly, MBS have found a temporary bottom late last week which has put a temporary stop to four straight weeks of selling off. So, look for MBS to move sideways and even make some light gains until it appears that the Senate has enough votes to pass the budget. |
Monday, December 16, 2013
Production Quality
http://globalhomefinance.com
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