The amount of
single young adults who are fully employed has increased from 25% in 1976 to
40% in 2013. But married young adults where both spouses worked full time
declined from 25% in 1976 to 15% in 2013. As I travel around and gawk at the
urban cores of places like Nashville, Birmingham, San Francisco, Denver, etc.,
plenty of these youngsters are paying some pretty hefty rents. Zillow reports
rents have jumped 7% nationwide over the past year, as the average renter now
spends 30% of their income on rent. Renter or owner, here is a pretty neat
site: slowly type any address and watch the picture of the current address
unfold. Any address - all over the world. And it is more interesting
when you do it slowly.
"Are
your employees engaged? According to Gallup's 2013 State of the American
Workplace "30% of the U.S. workforce is engaged in
their work, meaning that the vast majority of workers (70%) are not reaching
their full potential." It is no wonder the mortgage industry gets such a
bad rap when it comes to employee happiness and engagement. However, there are
some companies in our field bucking this trend and Endeavor America Loan
Services is one of them. Endeavor America was recently featured in Inc. Magazine explaining
a few of the ways they focus on creating an actively engaged and happy
workforce. EA believes that an engaged workforce leads to a culture of caring.
This is one of the reasons that its correspondent and wholesale channels
have had such dramatic growth over the last 12 months. It probably does not
hurt that they are purchasing loans in as little as 2-3 days as well.
Larry Gunnin with the Mortgage Network scribes,
"I hear you asking, 'Is the consumer better off?' when
lenders/banks/mortgage companies merge or are acquired. Do you really think
that the mortgage business needs more lenders and more originators on the
streets? My view is there are not enough loans to go around now, and 2015
forecast state the numbers may be even less next year: with margins shrinking
along with compliance cost escalating something has got to give. While
CFPB's objective is to protect the consumer, they are driving up cost, etc.,
but instead of getting rid of the 'bad apples' in the business it seems the
opposite is happening. The lenders that slide under the radar are still
conducting business while the good companies who are trying to comply and do
business as directed get hit the hardest. In that regard, the consumer is still
at risk. As with most government agencies that start out with good intentions,
their effect only hurts business and damages the wrong people."
Heck, as an
example of what Larry's talking about let's look at Oregon: reports show
that it has lost 2/3 of its mortgage workforce
since 2005.
Changes in
the banking & lending industries continue on. Frontier Bank, FSB, Palm Desert,
California was closed last Friday by the OCC, which appointed the FDIC as
receiver who turned it over to Bank of Southern California, N.A., to assume all
of the deposits of Frontier. On the flip side, but still leading to one less
bank in the United States, Chemical Bank ($6.2B, MI) will acquire Monarch
Community Bank ($187mm, MI) for $26mm in stock. Community Trust Bank ($3.5B,
LA) will acquire 4 branches in Houston, TX with $15mm in loans and $135mm in
deposits from Whitney Bank ($19.2B, MS). BB&T and Susquehanna Bancshares,
Inc. announced the signing of a definitive agreement under which BB&T will
acquire Susquehanna in a cash and stock transaction for total consideration
valued at approximately $2.5 billion and expand BB&T's footprint in the
Mid-Atlantic region. Bay Commercial Bank ($510mm, CA) will acquire Valley
Community Bank ($135mm, CA) for $4.15 per share in stock. The holding company
for Central State Bank ($436mm, IA) and Farmers & Mechanics Bank ($279mm,
IL) will acquire Buffalo Prairie State Bank ($72mm, IL).
On the
mortgage side, the rumors that this commentary has discussed for nearly a month
proved out to be true. loanDepot, LLC., the nation's second largest nonbank
consumer lender, announced the signing of a definitive agreement to
acquire Mortgage Master, Inc., a super-regional
mortgage lender and one of the country's largest privately-owned mortgage
companies. Both companies combined retail loan funding volume in October 2014
was $1.75 billion with nearly $70 million in top-line revenue, will have 130
retail lending branches across the country, four web production centers, and
employ 3,700 full-time associates including more than 1,200 licensed loan
officers serving borrowers in all 50 states. MM's Leif Thomsen and Paul Anastos
will stay on.
Switching
gears to technology, a couple of weeks ago I included an entry describing
STRATMOR Group's highly sought after LOS Technology Insight survey.
Since that post, over 150 lenders-- from the top 5 originators to small
correspondent and broker shops -- have registered to participate; most
responding within minutes of registration. This survey currently
represents feedback from at least 29 different LOS systems so, lenders, don't
miss this great opportunity to stand up and be counted! It takes
about 15 minutes to complete and, by taking this survey, you will
receive high-level summary information as regards to overall market share by
product / vendor as well as implementation success metrics at no charge.
Don't delay and miss the opportunity to access these invaluable insights that
will only be available to our Lender participants. Not that registration
ends December 31st. As is STRATMOR's practice, and to
assure confidentiality, we will conduct this as a "blind" survey. All
survey results will be aggregated; individual company results will not be
disclosed, nor will we publish the results in a way that would enable
individual respondent identities to be derived. To participate in the 2014 LOS
Technology Insight, contact STRATMOR Group at technologyinsight@stratmorgroup.com.
We just wrap up Veteran's Day when we are reminded that
Congress has returned from its 2014 election season, and they we must rely on
the lame duck folks to extend
veteran home buying benefits. Yes, the
VA's loan limits for high-cost counties are set to roll back to 2008 levels at
the end of December. Unless Congress takes action in the coming weeks, military
buyers in costlier communities could suddenly face significant
down payments that put homeownership out of reach.
Personally I am sure they'll do it - but do we really need to hear all the
jawboning that goes along with it?
J.D. Power
released the results of the 2014 U.S. Primary Mortgage Origination
Satisfaction Study this morning. Again, hats off to Quicken.
With the
day-of-days coming...that is to say, with the end of QE and a trend towards the
"normalization" in the interest rate markets, many analysts groups
have begun asking the when's and how's the mortgage industry will
be facing well into 2015. Wells Fargo, never
short of interesting papers, writes, "Our outlook is for growth at
2.5-3.0 percent for the next six months to a year. As for the labor
market-"underutilization of labor resources is gradually
diminishing"-we see this as evidence that the decline in the unemployment
rate to 5.9 percent was greater than what the FOMC had initially forecasted a
few months ago." However robust, or positive, the economy may appear
through the lenses of many economists, the Federal Reserve will face many
concerns in the coming months, one being long end control of the yield curve.
WF continues, "Going forward there is a significant challenge to
decision makers. Although not completely market-determined, interest rates at
the intermediate and long end of the Treasury curve will be less subject to Fed
policy control than at the short end of the curve. This will open the door to
more open-market pricing and introduce an element of volatility that has been
suppressed in recent years. All the more likely, given that in the year ahead
the FOMC will likely raise the funds rate to some extent."
Taking a
quick look at the daily bond market, because at this point that is all it
deserves, yesterday mortgage-backed securities held in well most of the day as
falling prices and a sloppy 10-yr note auction made for more attractive
absolute yields on MBS. Today we'll have the weekly release of Jobless Claims
(+278k last), and the final leg of the November quarterly refunding concluding
with $16 billion long bonds (30yrs) being sold at 1PM EST. Rates haven't moved
much all week, and after closing at a yield of 2.36% yesterday this morning
we're at 2.37% and agency MBS prices are nearly unchanged in the early going.
Executive
Rate Market Report is Here!
Weekly
claims at 8:30 this morning were
higher than expected, up 12K to 290K with consensus estimates at 280K. A little
higher but still claims are trending lower, one week isn’t a trend change but
with interest rates at these historic lows any weaker economic measurement does
get attention. In this case not much, there was little reaction to the increase
in claims in either stocks of bond trading. The US stock index futures at 9:00
pointing to a little better open at 9:30. MBS prices did get a boost initially
but at 9:00 +4 bps from yesterday’s close. The four-week moving average, a less
volatile measure than the weekly figures, rose to 285,000 last week from
279,000. This is the holiday shopping season so the increase is interesting as
retailers are adding more temps; Macy’s yesterday had soft earnings but said it
will add 36K temps for the holidays, an increase of 3.6% from last year.
Kicking
the can down the road; the
BOE estimates for when the Bank of England will increase its base lending rate
has been pushed back again, to next November. Investors see no inflation and
officials have cut the growth outlook once again. Here in the US investors
presently are looking toward next September for the Fed to make its first move to
increase the FF rate. Important to keep in mind that for 18 months now every
central bank as well as the IMF and World Bank have lowered future growth
forecasts each time there is another ‘official’ report and forecast. Yesterday
the BOE’s quarterly Inflation Report pointed to economic stagnation in Europe
that will keep UK exports from increasing. Meanwhile investors read the news
but toss it in the circular file and keep on buying stocks, setting new
all-time highs almost every day. In China, that economy is weakening the most
in 24 years; the second largest economy weakening, Europe at best soft but
edging back to recession; neither having any effect on US stocks.
At 9:30 the DJIA opened +31, NASDAQ +9,
S&P +3; 10 yr 2.36% unchanged from yesterday’s 10 yr auction. 30 yr MBS
price at 9:30 +9 bp from yesterday’s close and -10 bps from 9:30 yesterday.
Janet
Yellen will speak at 12:45 this afternoon, always newsworthy and at times the Fed chair can move
markets. Likely she won’t rattle the cage today though.
The final
Treasury auction this week; $16B
of new 30 yr bonds will be sold at 1:00 this afternoon. Yesterday’s new 10 yr
note was a little weak on demand.
At 2:00
this afternoon Treasury will report the Oct budget balance, estimates -$130B. It will not impact
markets.
Interest
rate markets are holding well in a narrow range this week and last. The bellwether 10 yr has traded
between 2.39% and 2.30% since late October (10/29). No serious negativity but
no reason to drive rates lower; with investors so bullish on stocks, and
nothing to jar traders to safe haven positions rate markets sitting quietly for
two weeks now. No inflation concerns are favorable for fixed income investments
but are not enough to push interest rates lower. Ukraine tensions increasing
but markets see that as nothing serious after panicking a few months ago. The
EU divided on increasing sanctions on Russia, likely there will not be any more
as the EU economies can’t take much more with the region’s economy slipping.
PRICES @
10:10 AM
- 10 yr note: +1/32 (3 bp) 2.36% -0.5% from yesterday’s auction
- 5 yr note: +2/32 (6 bp) 1.64% unch
- 2 Yr note: +1/32 (3 bp) 0.54% unch
- 30 yr bond: +9/32 (28 bp) 3.09% -1 bp
- Libor Rates: 1 mo 0.153%; 3 mo 0.233%; 6 mo 0.326%; 1 yr 0.564%
- 30 yr FNMA 3.5 Dec: @9:30 103.11 +9 bp (-10 bps from 9:30 yesterday)
- 15 yr FNMA 3.0: @9:30 103.94 +9 bp (-6 bps from 9:30 yesterday)
- 30 yr GNMA 3.5: @9:30 104.27 +13 bp (-35 bp from 9:30 yesterday ?)
- Dollar/Yen: 115.54 +0.05 yen
- Dollar/Euro: $1.2464 +$0.0026
- Gold: $1163.30 +$4.20
- Crude Oil: $76.07 -$1.11
- DJIA: 17,658.15 +45.95
- NASDAQ: 4699.28 +24.15
- S&P 500: 2042.55 +4.30
The company not only needs to satisfy the evolving needs of the purchaser, but they also want to exceed all expectations with their new line, Epic research.
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