Homographs are words of like
spelling but with more than one meaning. A homograph that is also pronounced
differently is a heteronym. You think English is easy? (Part 2 of 4.)
11) The insurance was invalid
for the invalid.
12) There was a row among the
oarsmen about how to row.
13) They were too close to the
door to close it.
14) The buck does funny things
when the does are present.
15) A seamstress and a sewer
fell down into a sewer line.
16) To help with planting, the
farmer taught his sow to sow.
17) The wind was too strong to
wind the sail.
18) Upon seeing the tear in the
painting I shed a tear.
19) I had to subject the
subject to a series of tests.
20) How can I intimate this to
my most intimate friend?
Let's face it - English is a
crazy language. There is no egg in eggplant, nor ham in hamburger; neither
apple nor pine in pineapple. English muffins weren't invented in England or
French fries in France. Sweetmeats are candies while sweetbreads, which aren't
sweet, are meat.
Here's something the funders
can try in the lunch room today: bet a shipper that they can't catch a dropped dollar bill with their fingers.
Congratulations to the Q1 Top 5 Customer Satisfaction Leaders. With thousands of
customers weighing in, the winners averaged 4.85 out of 5.0 Stars. Here are the
results; 1st - Diamond Residential Mortgage, 2nd - Absolute Home Mortgage, 3rd
- American Financial Network, 4th - Allied Mortgage Group, 5th - Security
National Mortgage. (Freedom Mortgage, is not on the list, but deserves
honorable mention: in its first week with SocialSurvey, over half of
Freedom's customers weighed in to give it an average score over 4.9.) To be on
the list, lenders must have a minimum of 500 Reviews. SocialSurvey must be
connected to the LOS, which eliminates selection bias and automates the
collection and sharing of online reviews. To read the full story, click here or to learn more about SocialSurvey, or have
their experts do a FREE analysis of your company's online reputation, contact Craig Pollack
(888.701.4512).
"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 Mergers &
Acquisitions (M&A) firm is 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 with confidential
inquiries. (Please specify opportunity.)
And a West Coast private equity firm is
seeking small to mid-size mortgage origination company as acquisition target.
Companies seeking interest in this strategic partnership should possess 6 or
more regionalized state licenses, and a Fannie Mae seller servicer license or a
Ginnie Mae seller servicer license. The lender should be currently engaged in
the origination of wholesale or retail residential lending, and be originating
a minimum of $15mm/month for the past 12 months. Lastly, the inquirer should
have a minimum net equity of no less than $3 million on its balance sheet.
Principals only; inquiries should be directed to me. (Please specify opportunity, and excuse any
delays in response due to attending the MBA's Secondary Marketing Conference.)
According to the 2014
STRATMOR Technology Insight Survey, roughly 3 out of 4 lenders are not
satisfied with the value they are getting from their LOS systems. Will
TRID experiences change the opinions of lenders? STRATMOR has launched
this year's Technology Insight survey to uncover the answer as well as capture
detailed information on both LOS and vendor satisfaction. This survey is
for Lenders Only and should take less than 20 minutes to
complete. Participation is FREE and lender respondents will receive a
high-level summary of overall market share by vendor.Detailed survey results
and STRATMOR's proprietary analysis of our findings will also be made available
for purchase this fall. To sign up to take this important industry survey
go to: STRATMOR Tech Insight Survey.
Last week this commentary
had some interesting information on loan servicing - the value of servicing can
impact borrower's rates and prices just as much as the mortgage-backed security
market. Michael
Ehrlich with ThomsonReuters has some timely comments for any company
considering servicing, or selling bulk blocks of the asset. "There may
also be additional on-boarding costs for initially using a sub-servicer when
the plan is to transfer the servicing mini-bulk at the end of the
quarter. Larger mini-bulk sellers may also benefit by making their best-ex
decision post-close...current market flow/co-issue contractual agreements from
servicing buyers will normally have a 3 or 6-month commitment on their pricing
grid, but variance exists across the buy-side and nuances must be completely
drawn-out to ensure clarity. MSR buyers have unique formulas used to
determine par rate and typically bake into their agreement the 'definition of
par', to allow for as needed par-rate adjustment options. After the initial
term, agreements may continue on the same period, or even a month-to-month /
week-to-week basis; though the end objective is to have the buyer and seller
agree to a term that suits both parties best."
LOs should be interested
to know that early payoff protection (EPO) is typically 3-4 months for
conventional and 3-6 months for FHA/VA originations. Often there is a
"non-solicit" imposed on the seller for the life of loan. "If
the loan is paid off during that initial protection period, the seller will
typically be required to reimburse the buyer for the sale cost of the MSR.
Early payment defaulted loans (EPDs) are covered under distinct legalese and
should be similarly monitored, as should any enhanced VA 'write-off/no bid'
risk protection components."
Who is buying co-issue
servicing, where the loan is sold usually sold to Fannie or Freddie and then
the servicing goes elsewhere? Mr. Ehrlich writes, "Acquiring over 30% of the
Co-Issue/CSR servicing of 2015 issuance was Pingora, tops for GSE and
GNMA. Roundpoint was also an aggressive buyer, 2nd in
both Co-Issue GSE and GNMA (PIIT) servicing acquisitions. Acquiring co-issue
servicing from Stearns ($7.5B), Prosperity Home Mortgage ($1B) and a handful of
other sellers, Seneca Mortgage added $10.6B in co-issue servicing (2015
issuance). Central Mortgage (Arvest) acquired through Co-Issue
(FNMA and Freddie) and CSR (primarily Freddie). $2.2B of their $10.4B
in co-issue/CSR servicing acquisitions were from a co-issue arrangement with
Guaranteed Rate. Nationstar acquired $8.4B co-issue of which $2.37B was
sourced from Movement Mortgage.
"Lakeview was
by far the top buyer of mini-bulk/bulk servicing (2015 Issuance), acquiring
over 37% of the bulk/mini-bulk servicing. Their top sellers included:
Impac ($4.1B), Prospect ($3.7B), Flagstar ($2.8B), Franklin American,
($2.2B), Plaza ($1.9B), and New American Funding ($1B). Matrix Financial
(Two Harbors) acquired $6.5B in bulk/mini-bulk from: Prospect Mortgage
($2.7B), Nationstar ($2.2B), American Pacific ($943M), and PHH ($611M)."
Yesterday we learned that
the NAHB index of home-builder sentiment was unchanged at 58 in May - less than
expected. The "expectations sub-index" rose to 65 from 62; current
sales conditions were unchanged at 63; buyer traffic was unchanged at 44. What
about other building and sales trends?
Going back to the autumn,
cash home sales were 32.5% of all transactions in September, down from 35.9% 12
months ago. Cash sales peaked in 1/11 at 46.6% and have historically averaged
25% of sales. At the current rate of improvement, cash transactions should
return to 25% by mid to late 2017. Cash sales were 58.3% of REO sales, 32% of
resales, 29.1% of short sales and 15.9% of new home sales. Since this time it
appears that all-cash sales are heading back down, as a percentage - much to
the happiness of lenders.
Doug Duncan, Fannie's
chief economist, said that affordability is the housing market's top issue.
Interest rates, long predicted to rise, will not go up as much as people might expect,
Duncan said: he's expecting only a 3.7 percent rate on a 30-year mortgage by
the end of 2016. A boon for real estate? Not necessarily. Housing
sales grew by 7 percent last year, the largest rate since 2007. They are
expected to grow by only half as much as this year. It's because
"housing affordability constrains as the expansion matures," Duncan
said.
How high are home prices
in California? According to Zillow, even the generous salaries for those in the
tech industry in Silicon Valley are unable to afford the expensive homes and high tax burden in
California, compared to similar tech employees in less expensive and lower
tax states like Washington. Zillow compared income information and household
data for software development engineers in Silicon Valley and in Seattle.
Entry-level software engineers at the two largest tech companies in Silicon
Valley must dedicate more than half of their after-tax salary to afford a home
in their community, compared to 30 percent for those living in Seattle. The
average home value for those who work at or near Apple's Cupertino, CA
headquarters reached $1.1 million at the end of 2015 compared to the median home
value of $522,000 for people who work at or near Microsoft's headquarters in
Redmond, WA and $437,000 for people who work at/near Google's campus in
Kirkland, WA.
Rent is also higher in
the Silicon Valley, as rent in the areas where Apple and Google employees often
live ranges from $3,748-$3,985. This is greater than the average of $2,106 -
$2,346 for Goggle or Microsoft employees living in Redmond or Kirkland. To
compensate for the higher cost of living, the median base annual salary of an
entry-level software engineer in Silicon Valley in 2015 was $115,000-$120,000,
slightly lower than the $110,000 salary for entry-level software engineers in
the Seattle area. For those working in Silicon Valley at a higher income, earn
$417 more per month in pre-tax income, but $357 less per month in after-tax
income compared to those working in the Seattle area.
The U.S. Treasury market,
and fixed-income securities backed by mortgages, had a bad start to the week as
global risk appetite increased and investors abandoned safe-haven assets. The
disappointing readings on the Empire State Manufacturing Index and the NAHB
Housing Market Index for May, both weak and which should have nudged rates
lower, had no effect. Here in New York the Empire State Manufacturing Index
fell 50 -9.0 in May from +9.6 in April.
For excitement today
we'll experience the Consumer Price Index (8:30AM EDT), Housing Starts &
Building Permits (8:30EDT), and Industrial Production & Capacity
Utilization (9:15AM EDT). If you're trying to figure out rate sheets, we
closed the 10-year Monday with a yield of 1.75% and in the very early going it
is unchanged, as are agency MBS prices.
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