Don't forget to wear a little
green today, and this was seen at a local bar: "Special Today Only! Buy
one beer for the price of two, and receive a second beer absolutely free!"
Some numbers are deceiving, others pretty straightforward. Mortgage banks and
focused on mortgages, but banks have other lending channels. For example, SNL
Financial reports the top 5 depositories in auto loans as of Q4 2013, in
billions, are Ally Financial ($52 in auto loans), Wells Fargo ($51), JPMorgan
Chase ($42), Capital One ($32) and Bank of America ($30). This group alone
represents about 58% of the $353 billion in aggregate auto loans at banks and
thrifts at the end of 2013.
I'm
not there yet, but CNN reports that 33% of people 65-69 years old are in the
workforce vs. 22% in 1990. In the Venn diagram of life, young people just
ain't buying homes like their predecessors. Formerly known as "Gen
Y" (or "generation whine" to some), this age group lies
somewhere in birth range from the early '80s to early '00s, placing some of
them in the ready-to-stop-renting-time-to-start-buying category. This is the
generation blamed most in recent times for not "behaving rationally,"
which really makes "housing experts" nervous. However, Housing Wire writer
Kerri Ann Panchuk, sees the overall lackluster demand not in this age group,
but those well into their 30's who haven't stepped up to the plate. She writes,
"For years now, everyone has been blaming the Millennials for stalling
the housing recovery because of their reluctance or inability to purchase a
home, but it may be the cohort right before them - the generational cuspers, or
those born from 1978 to 1982 - who started this trend. This age group now has
the lowest homeownership rate in decades. They're best defined as not quite
Gen-X, not really Millennials, but stuck somewhere in between. Back in 2012,
this same group had a 47.9% homeownership rate, which is 6.5 percentage points
lower than what those five years older had achieved at the same point."
Is it safe to assume those most caught in a <insert option ARM, 100%
financed> in '07 fell into this generational definition, and now have a
different view of what "home ownership" means? Does this generation
identify more with the "occupy Wall St" movement, than it does with
The Cosby family? I don't know, but this conversation is nothing new. Almost a
hundred years ago they asked the question: 'How 'ya gonna keep 'em down on the
farm, after they've seen Paree?'
Community
banks have long played an important role in the U.S. economy, providing loans
and other financial services to households and small businesses within their
local markets. These banks have many unique challenges in the lending industry.
One of those challenges include how to offer "big bank services" and
compete in local economies of scale while maintaining the advantages of being a
true local bank. Many lose their way (see: Tarp Auctions 19-23), but more stay
within themselves and continue to concentrate on profitable business channels,
market share, and customer service. Even with concentrating on all the things
community banks get right, volumes last year were down. Ken McCarthy and
Marshall Schraibman write in SNL Financials eBulletin,
that loan growth is still a tough find for community bankers. They write, "Last
year was relatively slow in terms of loan growth for community banks around the
country, and many small financial institutions seem to be guiding somewhat
conservatively for 2014 as well...median fourth-quarter 2013 loan growth among
commercial banks with less than $10 billion in assets, when compared with the
previous quarter, came in at 1.48% nationwide. Compared with a year earlier,
median growth nearly reached 4%." According to the article, generally
weak demand resulted in slow growth in every region of the country during the
fourth quarter of last year, with signs of no improvements heading into 2014.
The Mid-Atlantic region (for banks under $10B in assets), along with New
England, showed approximately 2% growth Q3-to-Q4, while the Southeast lagged
far behind, showing .68% growth.
In
order to comply with ATR and QM, Mountain West Financial is now
requiring closing agents to prepare a separate addendum to the HUD-1
summarizing the fees included in lines 801 and 802. When listing
third-party pass-through fees, closing agents must clearly list the fee type,
who it was paid to, and what kind of entity it was paid to (broker/lender,
third-party service provider, affiliate, lender, etc.). Seller credits
reflected on section 200 must be itemized either in this section or on an
addendum page, and in order for these to be excluded from the points and fees
test, there must be a written agreement executed by the buyer and seller that
specifies and itemizes the fees paid to the seller by name and dollar
amount. MWF will also be conducting a Final HUD-1 review and points and
fees test once the loan has closed, and if there are any fees that have changed
from the original HUD-1 escrow will be contacted for any changes and/or
corrections necessary.
MWF has updated its DU Refi Plus guidelines to allow LTVs up to
125% on primary residences provided that the FICO is 660 or above and the DTI
is 50% or below, regardless of AUS approval. These requirements only
apply to loans with LTVs over 105%.
Third Federal Savings and Loan has
expanded the number of states in which it offers a first mortgage refinance
product to include New York, Maryland, New Hampshire and the entire state of
Kentucky. Additionally, it is expanding its home equity line of credit offering
to include the above states, as well as California, New Jersey and
Pennsylvania. Third Federal announced it now offers first mortgage loans in 17
states; and home equity lines of credit in nine states.
Parkside Lending is has
added low-, mid-, and high-rise attached condos to the list of property types
eligible for Jumbo loans (Jumbo I and III). Condo projects must meet FNMA
eligibility requirements and be warrantable through CPM Expedited Review types
R or S, as limited reviews will not be permitted.
Titan has
changed its 5/1 ARM cap structure from 2/2/6 from 5/2/5, effective immediately;
however, a 2/2/5 cap structure may still be accommodated with a pricing
adjustment.
Lending Tree's new
Reverse Mortgage product has enjoyed increased popularity over the last couple
of months, recording an uptick of 50% in daily volume. For those
interested, the program is available for primary residences with loan balances
under $375,000, home loan amounts less than $625,000, and LTVs of 0-50% for
borrowers over the age of 62.
Yes, interest rates in the
United States are down since the start of the year - but if our economy is
doing better, shouldn't rates have moved higher? The heightened perception
of uncertainty obscures some recent positive metrics. And the uncertainty comes
from Europe and Russia. But in this country we'll have plenty to digest for
scheduled news. Today we'll have Empire Manufacturing, and Industrial Production
& Capacity Utilization at 3:15 AM HST (Hawaii), and the NAHB Housing Market
Index. Tomorrow the Consumer Price Index (CPI) hits the markets at 2:30AM HST,
along with Housing Starts and Building Permits. On Wednesday, March 19th,
the FOMC meeting announcement hits the tape - look for no change to overnight
rates, but another drop of $10 billion in tapering. Thursday we'll dine on
Existing Home Sales, Initial Jobless Claims, and Leading Economic Indicators.
Even with all of that, we're
most likely looking at another week of geopolitically-driven market movement,
as the headlines from Ukraine may dominate. On top of that - where is that jet?
There is some thinking that if terrorists took it, they now are in
possession of a jet which can be outfitted to do a lot of damage somewhere in
the world - talk about a "flight to quality" if something terrible
happens.
The biggest event may be the
vote in Ukraine's Crimean region on Sunday. As expected, Crimea voted to secede
from Ukraine; investors will be concerned that it could lead to an escalation
in the tensions between Russia and the US/Europe. That is what is happening,
although as I mentioned it was expected, and the U.S. 10-yr T-note, which
closed Friday at 2.64%, is now at 2.68% and agency MBS prices are worse between
.125-.250.
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