Was this really on Craig's
List?
"This is Lex, he's an 8 week-old
German Sheppard. I bought Lex as a surprise for my husband but it turns out he
is allergic to dogs so we are now looking to find him a new home. His name is
Chuck, he is 39 years old, a handsome and caring man who drives, helps
occasionally in the kitchen, and earns an okay income."
According to Reuters, the NY
state financial regulator is gearing up to launch an investigation into the entire
online lending industry. (The regulator has already been looking into
LendingClub.) Never a good thing to hear your secretary say, "The NY
Attorney General is holding for you on line 2." On a more serious note,
the lending and banking industries continue to suffer from various regulators
a) being afraid of the CFPB, and b) basically competing with each other to
create rules where there were none before in an attempt to make a name for themselves.
Of course the consumer bears the ultimate brunt of this.
"M&A slowed its pace
in 2016 because mortgage volume was strong Q1 (remember Q1 of 2014?) and
remains steady", says Dr. Rick Roque (413.297.6895). "This year
is expected to be a relatively flat year as compared to 2015, but remember,
2015 ended up higher than every analyst predicted due to the micro-boom in
rates in the first quarter of 2015 driving many refinance pipelines and
maintaining rates for purchase transactions. But as the summer volume
transpires, M&A activity will increase substantially because the multiples
are there for the right buyers and sellers."
A leading M&A firm
is working with a large, well-known residential lender seeking mortgage banks
in the Midwest or Mid-Atlantic markets to be purchased either by selling their
stock or assets; applicable mortgage companies would have closed between
$300M-$1.2B in 2015, or on pace to doing so in 2016, either consumer direct or
referral partner (Realtor) based originations. No Agency approvals are
necessary since they are already in place. If you would like to have your
firm acquired, possibly receive a 2-4x after tax multiple, maintain your
leadership and control, but rapidly accelerate your growth with significant
access to capital, a broad array of new / innovative and non QM products,
please contact me
for a confidential discussion - principals and agents only.
In banking M&A
continues. In the last week the industry learned that in Georgia State Bank
and Trust Co ($3.5B) will acquire S Bank ($109mm) for about $11mm in cash (50%)
and stock (50%), or roughly 1.02x tangible book. First-Citizens Bank &
Trust Co ($32.1B, NC) will acquire Bank of Virginia ($348mm, VA) for about
$35mm in cash. And Simmons First National Bank ($7.5B, AR) will acquire The
Citizens National Bank of Athens ($552mm, TN) for about $77mm in cash (52%) and
stock (48%) or roughly 1.21x tangible book.
Regarding banking,
marketing and advertising is high on the list of banking examination reviews.
Jonathan Foxx, Managing Director of Lenders Compliance Group, has just
published the article "Advertising Compliance: Getting Ready for the
Banking Examination." It is part one of a two-part series. Jonathan provides
a lot of helpful insight into preparing for the inevitable examination of your
advertising compliance. It will be published in the May edition of National
Mortgage Professional Magazine, but for those interested, it can be downloaded here.
Yesterday I brought up the
ignored or misunderstood topic of Section 342 in Dodd Frank. I took the
opportunity to contact a handful of random of others on the forefront of this
topic. Maria
Zywiciel, who runs NAHREP Consulting Services, had some observations. "Mention
Dodd Frank 342 and you many get a blank stare but it's a regulation that needs
some serious thought. The disproportionate impact of the economic downturn on
diverse communities and minority and women owned businesses prompted
legislators to seek stop gaps to future downturns. Congress passed Section 342
of the Dodd Frank Wall Street Reform and Consumer Protection Act, and Section
342 created the offices of Minority and Women Inclusion (OMVI) in federal
agencies that regulate the financial services industry.
"These agencies
published The Joint Standards that provide five areas that a regulated firm may
consult to develop its diversity policies: Organizational Commitment to
Diversity and Inclusion, Workplace Profile and Employment Practices, Procurement
and Business Practices, Practices to Promote Transparency and Organizational
Diversity and Inclusion, and Self-Assessment.
"Marketing and
Recruiting often are the first things companies try to affect with regard to
their diversity efforts, often not even considering their vendor procurement
policies and diversification amongst their vendor partners. The small
representation of diverse vendors doesn't match the demographic trends of women
and minority owned businesses. For example, Latinas own 36% of U.S. businesses
by minority women and one in every 10 women owned businesses! Becoming a
preferred vendor, however, is not as easy as applying for vendor status. Some
requirements such as minimum net worth requirements or minimum number of years
in business may make barriers of entry more cumbersome for minority or women
owned firms to overcome.
"Much like the
benefits of a more diverse workforce or customer base, having diverse vendors
can enhance your business' bottom line or avoid costly mistakes. Joe Nery,
partner and cofounder of Nery and Richardson Law in Chicago draws on his
Hispanic Heritage to help his clients. He once challenged an Illinois law that
he argued posed a disparate impact on minority neighborhoods. 'I have a
perspective that is unique and could be overlooked if it weren't for my
background,' Nery said. He added, 'As the demographics of our country change,
more businesses will be owned by individuals of diverse backgrounds. The
consumers they serve will also be diverse or located in multicultural
communities. Thus, the vendors that supply these businesses must be familiar
with local or community customs and preferences. By employing diverse vendors
that are sensitive to these nuances, companies will increase the attractiveness
and eventual success rate of their products or services.'
"Sara Rodriguez,
owner of EKKO, a women-owned title company in Virginia, says business is
booming but like other vendors she had to go through the rigorous vendor
approval process. 'It can be very expensive,' Sara said. 'If you can afford it,
you may want to consider hiring a company that can perform due diligence to
make sure you can pass all federal, state and even individual lender
requirements before you even apply for the lender approval.' The benefits to
her have outweighed the obstacles, 'I can provide services in both English and
Spanish and I understand where they are coming from. Lenders who use our
services provide better customer service.'
"The advantages of
applying the Joint Standards and the positive reaction from regulators to
companies that do so should be encouraging to the financial industry. Embracing
these standards from marketing, recruiting all the way to the diversification
of vendors can give companies a competitive edge in an ever more diverse world.
And from the SF Bay Area
business coach and trainer Kitty Cole provided some advice for women-owned
businesses starting out. "My advice for your readers is to set
yourself apart by keeping your target market small. Create some specialty or
expertise that is rare in your field. Being the most knowledgeable on the
product or service in your field goes a long way, so do lots of advance research
so you know your competitors. Be prepared to make a list of possible questions
so you have all the answers. (I travel to most of my coaching clients, which is
uncommon in this industry, although I do coach by phone in some instances.) I
have found that a key component of success is response time. Today most
everyone expects you to respond within minutes. Although that is impossible at
times be the first to respond with the most knowledge and useful information.
Then be generous with your advice. Last, keep your reputation intact. Let
nothing sully it - it is all you have. If it becomes marred by a lack of
integrity, a lack of response or any other flaky behavior, it can stall your
growth."
More tomorrow on this!
New products? Sure there are.
Chase introduced
the new Standard Agency 97%, an affordable loan product designed for first-time
homebuyers who have limited cash for a down payment and closing costs. This new
loan program requires only 3% from a customer's own funds. With LTVs
greater than 95% to 97%, the remainder of the down payment and closing costs
can come exclusively from gift funds and any LTV lower than 95% requires 0% of
customer funds. Customers must have a 680 FICO or higher and at least one
customer must be a first-time homebuyer.
The Wall Street Journal is reporting that Wells Fargo is
rolling out a new mortgage for its retail borrowers making minimal down
payments, an offering that could allow the bank to step back significantly from
the Federal Housing Administration program. The yourFrstMortgage program is a
3% down payment program and will be a partnership with Fannie Mae. FICO scores
can go as low as 620 and debt-to-income ratios can be higher than the usual 43%
limit. These loans would require mortgage insurance. It is believed that weaker
borrowers will likely still have to pay loan level price adjustments (LLPAs)
which may make an FHA loan remain more attractive.
American Advisors Grouphas released its jumbo
reverse mortgage loan, called the AAG Advantage, to its wholesale partner
network in California. With AAG Advantage, California brokers and loan officers
may originate reverse mortgages through AAG on properties valued at up to $6
million, versus the FHA loan limit of $625,500 associated with a traditional
Home Equity Conversion Mortgage (HECM) loan. (The AAG Advantage was initially
launched in select states by the company's retail channel last September. The
loan will roll out to other states through both retail and wholesale platforms
in future phases.)
United Wholesale Mortgage has launched a new Jumbo Elite program that will enable
mortgage brokers to offer their borrowers one of the easiest Jumbo processes
along with highly competitive rates. The Jumbo Elite program's simplified
process will make brokers more attractive to savvy Jumbo borrowers throughout
the country. Brokers will enjoy transparent guidelines and direct communication
with their underwriter throughout the entire loan process. Highlights of UWM's
Jumbo Elite program include: Loan amounts up to $2 million, Exclusive rate
incentives for borrowers with 740+ FICO, Eligible for primary and second homes,
ARM and fixed-rate options available and Closings in 25 days or less. Visit UWM
website for program details.
Not
much, really, is happening with mortgage prices. The yield curve steepened a
little on Wednesday based on no news but a solid $34 billion 5-year note
auction. The FHFA Housing Price Index rose 0.7% m/m in March (6.1% y/y) after
climbing 0.4% in February.
We've
had more news this morning, however, although given the "out of
office" replies I am receiving plenty of folks are already thinking about
the Monday holiday. We saw Initial Jobless Claims for the week ending 5/14
(-10k to 268k) and April Durable Goods Orders and Durable Goods Orders
ex-transportation (+3.4%, higher than expected). Coming up is the April Pending
Home Sales number at 7AM PDT and a $28 billion 7-year note auction. We closed
Wednesday with the 10-year yield at 1.87% and this morning, after the initial
spate of numbers, it is 1.86% and agency MBS prices are better by nearly
.125.
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