With
plenty of texts flying around regarding the MBA's conference in San Diego that
starts today and thus the early commentary, here is an "exciting"
tidbit - text messages are old enough to be college graduates. The first text
message was sent on this date in 1992 - 22 years ago. It was sent by Neil
Papworth, an England-based software developer. "Merry Christmas" was
the first text. It is rumored that the second text was, "who dat?"
Yes, technology has come a long way, and Millennials demand it. Sometimes LOs
have difficulty explaining to borrowers why a residential loan can take weeks
or months to process when places like Lending Club can make a decision in a
matter of seconds.
For
company news, Fidelity Bank is expanding the Wholesale and Correspondent
Lending Division within the Southeast Region. Industry veteran Craig
Dodds was hired this year to manage the division and grow the
channel. "We are now looking for AEs for both wholesale and
correspondent lending in Texas, Louisiana, Arkansas, Florida, Georgia, Alabama,
North and South Carolina, Virginia, Maryland, Tennessee, and Kentucky. Based in
Atlanta, Fidelity Bank is a direct
seller servicer to the agencies and provides AEs with access to wholesale
and correspondent programs (both delegated and non-delegated) from a full
menu of products. Please send your confidential resume to Craig (above), to resumes@lionbank.com,
or mail to: Fidelity Bank, Human Resources 3 Corporate Square, Suite 110,
Atlanta, GA 30329. EOE/M/F/Disabled/Veteran.
On
the warehouse side, Preston State Bank (PSB)
has successfully launched a "non-captive" mortgage warehouse lending
division servicing both the mini-correspondent and correspondent channels
in the state of Texas. PSB is a state chartered commercial bank, established in
2003, and its warehouse lending program has over 50 approved investors and
provides flexibility to the mortgage banker in how they run their business.
Lastly,
"Do your lending partners obsess about turn times? When it comes to turn
times and meeting close of escrow deadlines, not all lenders are created equal.
Endeavor America Loan Services was recently named a 'Five-Star Lender' by MPA Magazine for its
stellar turn times. How does EA do this? First, currently 91% of Endeavor
America's fundings are purchases. In a recently measured loan cycle, EA looked
at the last 1,166 purchase loans they closed - 37% (434 units) closed by or
before the close of escrow date; 27% (308 units) within one-seven days of the
COE; and 36% (424 units) closed over one week from the original COE. That means
64% of all purchases sent to EA closed before, on, or at worst, within one
week of the close of escrow date including loan files where EA was the lender
of second choice. That's some pretty impressive data to keep in mind when
you choosing where to send your next loan." To learn how to become
approved with Endeavor America, visit its wholesale or correspondent website.
Speaking
of personnel, I guess if you want job security, HUD is the place to be. It
seems that HUD has a very low rate of firing
anyone - which means that management excels at hiring the right
people in the first place, right? Right? (One thing that comes out of Haiti
periodically is a leader that declares himself "president for life."
I think that the last one - Jean-Claude-Duvalier, the self-proclaimed
"president for life" of Haiti whose corrupt and brutal regime sparked
a popular uprising that sent him into a 25-year exile, died in October.)
Capital
markets folks, and ARM originators, are still talking about "being charged
to use LIBOR" - but there is still confusion out there about it. As
a reminder, ICE Benchmark Administration recently announced a new licensing
framework for users and redistributors of LIBOR. The changes can be found here. Included in the new
framework is a discounted fee for smaller institutions that use LIBOR only in
the context of a single currency. The MBA's Dan McPheeters is hosting a call
to hear directly from ICE Benchmark Administration on what this means for your
company. "Please join us Tuesday, December 9th at 12PM EST to learn
more about current and planned developments with LIBOR and to ask questions
regarding the licensing fee or the rate itself."
Here’s some upcoming
events….
Texas
Mortgage Bankers Association's 2014 Education Webinar Series: Market and Valuation Trends for
Mortgage Servicing Rights, is scheduled for December 11th with speakers from
MountainView Servicing Group. The registration form and additional information
is available by clicking here.
Any
entity investing in the bond market has plenty of choices: Treasury debt,
mortgage-backed securities, municipal bonds, bonds issued by foreign countries,
and so on. Here in the United States companies angling to get ahead of
rising interest rates have sent U.S. corporate-bond sales in 2014 to
an annual record: $1.5 trillion. Hey, if you're Exxon or IBM and
can borrow a yields below 4%, why not?
BofA Merrill Lynch published
its "2015 Agency MBS Outlook: Scarcity Value." Their staff of
bright MBAs and quant jock's findings includes mortgage valuations being priced
to low volatility, which is their core view, due to minimal credit growth and
net issuance of mortgage-backed Securities (MBS) being well behind the 2013
level. Credit still remains an issue, as the cost of credit is high and
affordable credit through new programs is not available. BofA ML's forecast
for 2015 net issuance is $65 billion, with net growth across all private
MBS holders, with the opportunity for MBS to tighten if the post-crisis lows in
volatility are achieved. The federal government's guidance on reinvestment
agency MBS pay downs will be the focus in 2015 but the lack of capital and
political action will restrain reform.
On a recent broadcast of
Capital Markets Today
sponsored by Neighborhood Stabilization Capital
Management, Gregg Rand, CEO & Founder of OwnAmerica discussed the
institutionalization of the single family rental industry. Rand stated that out
of the crash, the single family rental industry has evolved to be a
sophisticated and scalable industry. Rand goes on to point out that the
industry is spinning off a non-distressed 8-12% cash on cash yield that is
attracting Wall Street institutional investors. He further discussed barriers
to entry, ways to invest, multi-borrower securitizations, data aggregation
tools, demographics and evolutionary next steps. It's worth a peruse with an
analytic eye....or ear.
Continuing
with the market news, Paul Jacob with Wunderlich Securities summed
things up: "We're keeping an eye on the situation in Washington regarding
last-minute budget talks. (Are there any other kind?) Dec. 11 is the current
deadline. At this point a government shutdown looks unlikely, though I wouldn't
bet the farm. This situation will be an interesting preview for whether
upcoming Congressional session will be about."
Executive
Rate Market Report:
Interest rate markets started unchanged this morning after more
selling yesterday. At 8:15 ADP reported November private jobs were up by 208K, less
than 223K expected, October was revised up 3K to 233K. 176K of the private jobs
were in the lower paying service sector, goods-producing industries, which
include manufacturers and construction companies, increased 32,000,
construction rose by 17,000, while factories added 11,000 jobs. Companies
employing 500 or more workers added 42,000 jobs. Medium-sized businesses, with
50 to 499 employees, took on 65,000 workers and the smallest companies
increased payrolls by 101,000. The addition of 101K in small businesses is at
odds with NFIB data that show small businesses not as aggressive as this data
suggests.
Q3 productivity and unit labor costs at 8:30;
productivity expected to have been revised from +2.9% to 2.4%, as reported
+2.3%. The initial productivity last month was +2.0% before the revision today.
Unit labor costs declined 1.0%, revised from -3.7% in the advance report a
month ago (revised today from +0.3%); forecasts were -0.1%. The drop in unit
labor costs is welcome as another data point indicates wage pressures are not
increasing, adding to the view inflation is not an issue now and won’t likely
be for another year at the earliest.
At 9:30 the DJIA opened -`13, NASDAQ +3, S&P
+1. 10 yr note 2.30% unchanged, 30 yr MBS price -9 bps from yesterday’s close
and -27 bps from 9:30 yesterday.
Tomorrow the ECB will meet to decide on more QEs in an effort to
turn the flagging region around. Up to now anything the ECB has
done has fallen well short of spurring growth. The question today is will the
ECB begin to buy bonds from the EU countries; so far the bank has been
purchasing asset-backed securities but so far it hasn’t shown much impact.
Mario Draghi said the ECB may broaden its asset-buying program to include
government bonds, he has said that numerous times recently, will he do it is
the question at the moment. The asset-backed debt market in Europe contracted
more than 40% in the past four years as banks stopped selling the debt after
regulators blamed the securities for worsening the crisis in 2008.
At 10:00, a few minutes ago, the November ISM services sector
index, expected at 57.3 from 57.1 in October, the index increased to
59.3, about where it was in August but better than forecasts. The employment
component dropped to 56.7 from 59.6 while new orders increased to 61.4 from
59.1. A decent report but not a door buster, all of the interior components
were above 50 indicating expansion so this report is supportive to stocks and a
little soft for the bond market. There has been no noticeable reaction to the
10:00 report so far.
The Fed will release its Beige Book at 2:00 pm today. The
survey, based on reports from it 12 regional banks, will provide anecdotal
information about the economy before the central bank’s Dec. 16-17 FOMC
meeting.
Mortgage applications decreased 7.3% from one week earlier,
according to data from the Mortgage Bankers Association’s (MBA)
Weekly Mortgage Applications Survey for the week ending November 28, 2014. This
week’s results included an adjustment for the Thanksgiving holiday. The
Refinance Index decreased 13% from the previous week. The seasonally adjusted
Purchase Index increased 3% from one week earlier. The refinance share of
mortgage activity decreased to 60% of total applications from 63% the previous
week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.7% of
total applications. The FHA share of total applications decreased to 9.3% this
week from 9.4% last week. The VA share of total applications decreased to 9.4%
this week from 10.3% last week.
PRICES @ 10:10 AM
- 10 yr note: -3/32 (9 bp) 2.30% +1 bp
- 5 yr note: -3/32 (9 bp) 1.62% +3 bp
- 2 Yr note: -1/32 (3 bp) 0.57% +2 bp
- 30 yr bond: -1/32 (3 bp) 3.02% unch
- Libor Rates: 1 mo 0.157%; 3 mo 0.234%; 6 mo 0.328%; 1 yr 0.562%
- 30 yr FNMA 3.5 Dec: @9:30 103.72 -9 bp (-27 bp from 9:30 yesterday)
- 15 yr FNMA 3.0 Dec: @9:30 103.94 +8 bp (-4 bp from 9:30 yesterday)
- 30 yr GNMA 3.5 Dec: @9:30 104.53 -9 bp (-14 bp from 9:30 ye4sterday)
- Dollar/Yen: 119.70- +0.49 yen
- Dollar/Euro: $1.2313 -$0.0070
- Gold: $1205.50 +$6.10
- Crude Oil: $67.59 +$0.71
- DJIA: 17,883.97 +4.42
- NASDAQ: 4750.03 -5.78
- S&P 500: 2069.67 +3.12
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