The
Quotes of Steven Wright, part 2 of 3.
13 -
How do you tell when you're out of invisible ink?
14 - If
everything seems to be going well, you have obviously overlooked something.
15 -
Depression is merely anger without enthusiasm.
16 -
When everything is coming your way, you're in the wrong lane.
17 -
Ambition is a poor excuse for not having enough sense to be lazy.
18 -
Hard work pays off in the future; laziness pays off now.
19 - I
intend to live forever. So far, so good.
20 - If
Barbie is so popular, why do you have to buy her friends?
21 -
Eagles may soar, but weasels don't get sucked into jet engines.
22 -
What happens if you get scared half to death twice?
23 - My
mechanic told me, "I couldn't repair your brakes, so I made your horn
louder."
24 -
Why do psychics have to ask you for your name?
How
much do small firms spend on paying for examiners and auditors camping out in
their shops? And what about legal bills? I am sure it is a tiny fraction of
what companies like Bank of America, Citi, and Chase are spending. And this
week Reuters did a piece on the continuing probes that Wells Fargo is handling - what a
nightmare.
Assurance Financial reports it is closing loans on
time in spite of TRID. The company is expanding, too. They have an immediate
need for branch managers and loan officers throughout the Southeast and
Southwest. Assurance Financial supports all of its LOs with ready-to-use
marketing materials and customized webpages plus a dedicated back-office team
that is focused on consistently closing loans on time. If that sounds good to
you, reach out to Paul
Peters, CMB at 225-239-7948 or visit www.lendtheway.com/careers.
Congrats
to Tom Davis who First Guaranty Mortgage Corporation appointed to be its
National TPO Sales Director.
And
Dart Appraisal, an independently-owned, nationwide appraisal management
company (AMC), announced some personnel additions. Timothy Coleman will be
covering south Texas, Gary Hale will cover the north Texas area including
Dallas/Fort Worth, and Brian Killian is now a national account executive for
Missouri and Kansas.
And
what trends are we seeing in rents and multi-family news that will eventually
help lenders? After all, the higher rents go, the mo' better buying looks -
all they need are some decent down payment assistance or high LTV programs.
Reis Inc. reports average effective apartment rents climbed 4.6% nationwide in
2015, the "best" performance since 2007. In fact apartment rents have
risen more than 20% since early 2010. And to the surprise of no one, research
by Equifax and Moody's finds the percentage of people age 18 to 34 years old
that are living with their parents is around 23% currently versus the roughly
18% level seen from 1990 to 2005.
As far
back as December we learned that US banking regulators were stepping up their scrutiny of commercial real estate
lending practices.
Recently
the Fed released its senior loan officer survey. The January survey results
indicated that banks tightened their standards on commercial and industrial
(C&I) and commercial real estate (CRE) loans in the fourth quarter of 2015.
The survey results indicated that demand for C&I loans had weakened
somewhat and demand for CRE loans strengthened somewhat during the fourth
quarter on net. Banks indicated that they expected standards on C&I and CRE
loans to tighten over 2016 and loan performance of C&I loans and loans
secured by multifamily residential properties (MF loans) to deteriorate over
that same period. Regarding loans to households, the survey found a moderate
easing of standards on some categories of residential mortgage loans as well as
on auto loans, while banks reported having left standards on credit card loans
basically unchanged.
In
an interesting twist, the omnibus spending package Congress recently passed
included measures easing restrictions on foreign real estate investment that
some expect will increase foreign investment in commercial real estate by
billions of dollars.
The
MBA has released numerous reports regarding the commercial/multifamily real estate
finance markets. The MBA's Q4 Commercial/Multifamily Mortgage Bankers Originations
Index report highlights that commercial and multifamily originations were
up 19 percent in the fourth quarter of last year and 24 percent YoY. The fourth
quarter also marked the fourth greatest volume for borrowing and lending thus
far. Another MBA report suggests that eleven percent of outstanding commercial
and multifamily mortgages held by non-bank lenders/investors will mature this
year, which would be a 51 percent increase from 2015. Maturities are also
expected to grow to $208 billion in 2017. The MBA forecasts a 3 percent rise in
commercial/multifamily mortgage banker's originations in 2016 and current
mortgage debt outstanding should increase to $2.9 trillion.
Zelman
and Associates published its Banking Survey from the fourth quarter of
2015.Lenders ranked availability of AD&C capital at 68.2 this quarter,
slightly down from 70 the previous quarter. AD&C loan balances for the
banking industry was up 18 percent YoY, with 2015 anticipated as being the year
with the strongest growth since 2006. Within the last 30 years, AD&C loans
have averaged 5.7 percent of total outstanding bank loans, with peaks reaching
in 1986 at 8.5 percent and 2007 at 8.8 percent. Survey respondents believed
capital availability was the strongest among local lenders at 78.7 and banks of
all sizes have been participating in the recovery. At the end of the fourth
quarter last year, the availability of single-family AD&C financing was
rated 76.4 and the availability of multi-family AD&C was rated at 67.2. For
more information regarding the survey, contact Ivy at ivy@zelmanassociates.com.
Now
is the time to sell, according to a recent Apartment Survey published by
Zelman. The majority of respondents (61 percent) said that buyer demand is
strong and pricing is high, making it a prime seller's market. December blended
rent growth reached 3.7 percent, with the strongest rent growth evident on the
West Coast at 4.9 percent, but at the same time, the deceleration has been most
severe on the West Coast as well as rent growth declined 90 basis points from
last year. New move in growth for Decembers slightly declined to 3.3 percent
along with occupancy at 94.2 percent. Implied move-outs resulting from
purchasing a home declined to 14.6 percent. Pricing power was noticeable in 22
of the 30 metros that are tracked and multi-family transaction volume should
increase 12 percent in 2016.
Wells
Fargo Funding is updating its multi-family 2- to 4-unit and condominium
adjusters for Fannie Mae HomeReady and Wells Fargo Funding Home Opportunities
loans to better align with Fannie Mae's adjuster caps. The Best Effort and
Mandatory rate sheets will reflect multi-family 2- to 4-unit and condominium
adjusters by LTV and FICO for HomeReady and Home Opportunities Loans effective
February 29th. These changes will also mitigate issues Sellers were
experiencing when registering and/or locking HomeReady Loans, which were the
result of differences between Wells Fargo Funding adjusters and Fannie Mae's
adjuster caps.
As
if finding a place to live as a college student was not hard enough, new
apartment buildings that have popped up in Philadelphia are attracting young
adults, due to its close proximity to college campuses like Drexel University
and University of Pennsylvania. Yet these apartment complexes are not geared
towards the undergraduate students that are nearby, but instead are intended to
attract young professionals to live in the University City. The cost to rent
these apartments range from anywhere between $1,900 for a small one bedroom
apartment to almost $3,000 per month, as the high rent prices are meant to
discourage undergraduate residents. Even the developers who have been building
these luxury apartments near college campuses say they are intended for faculty
members and not students and at the same time, allow young adults to enjoy the
"college experience" by way of the apartment location. Not only is
the high rent a strategy to prevent undergraduates from renting, but the lease
terms purposefully miss the start of the academic year, and they reject
applicants who rely on a guarantor to pay rent. The trend for building luxury
apartments for young professionals is starting to take hold into other college
campuses like Arizona State University, Texas A&M University in College
station and the University of Chicago.
The federal banking agencies issued a statement
to reinforce prudent risk-management
practices related to commercial real estate (CRE) lending. The agencies have
observed substantial growth in many CRE asset and lending markets, increased
competitive pressures, rising CRE concentrations in banks, and an easing of CRE
underwriting standards. Financial institutions should maintain underwriting
discipline and exercise prudent risk-management practices to identify, measure,
monitor, and manage the risks arising from CRE lending. Financial institutions
should have risk-management practices and maintain capital commensurate with
the level and nature of their CRE concentration risk. The statement reinforces
existing guidance for CRE risk management and contains a table that lists
interagency regulations and guidance related to CRE lending activities.
And this week Ken Harney wrote a piece for the
Washington Post on how lenders are
promoting home ownership for renters - catch the wave!
Turning
to something simple, like the bond markets, let's face it: as opposed to a few
weeks ago, when our markets were being moved by oil and China, this week seems
practically moribund. We have seen, however, plenty of intra-day volatility on
Tuesday and again yesterday - and that impacts secondary marketing results. The
U.S. Treasury complex rallied sharply Wednesday morning after we learned that
sales of new homes in the U.S. fell to a 494K annual rate in January from 544K
in December, and that Markit's flash PMI for the U.S. service sector fell to
49.8 in February, well short of both expectations and the January reading of
53.2. But then prices bond prices headed back to pretty much end unchanged on
the day. Fortunately the $34 billion 5-year Treasury auction was well-received.
Are
we decoupling our markets from what happens in China? Wouldn't that be nice? In
overnight news, European stocks rose despite the Shanghai Composite index
falling the most in a month. Today for scheduled data we've seen Initial
Jobless Claims (+10k to 272k, as forecast). We've also had January Durable
Goods Orders and Durable Goods Orders ex-transportation (+4.9%, +1.8%,
respectively, the strongest in about a year), and coming up is the December
FHFA Housing Price Index. Anyone wondering where rate sheets might come out
this morning should know that the 10-year yield was 1.74% at the close of
Wednesday and this morning is sitting around unchanged with agency MBS
prices a shade better.
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