On their wedding night, the young
bride approached her new husband and asked for $20.00 for their first
lovemaking encounter. Her husband readily agreed.
This scenario was repeated each
time they made love, for more than 40 years, with him thinking that it was a
cute way for her to afford new clothes and other incidentals that she needed.
Arriving home around noon one
day, she was surprised to find her husband in a very drunken state.
During the next few minutes, he
explained that his employer was going through a process of corporate downsizing,
and he had been let go. It was unlikely that, at the age of 59, he'd be able to
find another position that paid anywhere near what he'd been earning, and
therefore, they were financially ruined.
Calmly, his wife handed him a
bank book which showed more than forty years of steady deposits and interest
totaling nearly $1 million.
Then she showed him
certificates of deposits issued by the bank which were worth over $2 million,
and informed him that they were one of the largest depositors in the bank. She
explained that for more than three decades she had "charged" him for
sex, these holdings had multiplied and these were the results of her savings
and investments.
Faced with evidence of cash and
investments worth over $3 million, her husband was so astounded he could barely
speak, but finally he found his voice and blurted out, "If I'd had any
idea what you were doing, I would have given you all my business!"
That's when she shot him.
You know, sometimes, men just
don't know when to keep their mouths shut!
One of the biggest challenges
faced by business owners today is attracting and retaining great people.
Millennials and those with diverse ethnic backgrounds make up an enormous part
of today's workforce, at this point larger than the Baby Boomers, and survey
after survey finds that this generation values flexibility as much and
sometimes more than compensation. Here's a piece about this group and their effect...not on
housing but on food! But there is more below about the generation's impact on
housing.
For a dose of learning Vantage
Production and Weiner Brodsky Kider PC attorney's Jim Milano and Melissa
Wachtel will be conducting a fast-paced briefing during the webinar "RESPA
& Co-branded Marketing-Critical Guidelines for Remaining Compliant"
on August 3, from 1-2PM EDT. Don't miss the opportunity to listen in and submit
your questions to two of the mortgage industry's leading compliance attorneys. Register now!
In company news Republic
First Bancorp, Inc., parent company of Republic Bank, announced that it has
entered into an agreement to acquire Oak Mortgage Company, LLC, a residential
mortgage company headquartered in Marlton, NJ. Oak Mortgage will maintain its
current business model and operate as a wholly owned subsidiary of the Bank.
Apparently the lender is a "natural fit" for Republic's growth
strategy in the southeastern Pennsylvania and southern New Jersey market. Oak
Mortgage currently has 64 employees that specialize in the origination of
residential mortgage products. In 2015, Oak closed more than $330 million in
mortgage loans - about $30 million a month. "Anyone that visits a Republic
Bank store will now have direct and immediate access to an experienced
residential mortgage lender and all customers of Oak mortgage will have full
access to the products and services of one of the fastest growing financial
institutions in the Philadelphia region."
In the last week or two
things have been pretty quiet in terms of announced bank mergers - the dog days
of summer. Equity Bancshares, Inc. Announces Merger Agreement with Community
First Bancshares, Inc. First National Bank of Pennsylvania ($20B, PA) will
acquire Yadkin Bank ($7.5B, NC) for about $1.4B in stock. In Michigan Bank of
Ann Arbor ($1.2B) will acquire Bank of Birmingham ($274mm) for about $33mm in
cash.
But vendor news continues
to come out, impacting lenders. There has been a huge shift toward outsourcing
segments of the residential lending process to individuals or companies that
specialize in certain tasks: ol' Betsy just can't manage post-closing QC,
shipping, and investor relations all by herself anymore. Of course that means
that lenders must hire personnel to manage those third party relationships, and
can even hire companies that specialize in vendor management!
Clayton Holdings LLC mortgage
industry, announced that it has developed an end-to-end underwriting, valuation
and due diligence solution for the growing "fix and flip" lending
market. Jeff Tennyson, president of Clayton stated "We have designed an
integrated, one-stop solution for warehouse and hard-money lenders that draws
on Clayton's deep experience in underwriting and the unique skill sets in
valuing and monitoring single-family rental properties that reside within our
Green River Capital and Red Bell Real Estate subsidiaries."
Ellie Mae launched a new version of Encompass, its
all-in-one mortgage management solution. Encompass 16.2 offers new and enhanced integrations
with Freddie Mac tools, and enhancements to the Total Quality Loan (TQL)
program, including strengthened strategic partnerships and updates to Encompass
Product and Pricing Service (EPPS). Encompass will offer Loan Product Advisor,
the replacement for Freddie Mac's automated underwriting system, Loan
Prospector®, and the cornerstone tool of Freddie Mac's Loan Advisor Suite. Loan Product Advisor is the next generation in the
evolution of automated underwriting with a focus on further streamlining the
underwriting process for greater efficiency. In addition, Encompass will offer
integration with Freddie Mac's Loan Quality Advisor, available to Freddie Mac
sellers. The integration of Loan Quality Advisor, Freddie Mac's risk and loan
eligibility assessment tool, into Ellie Mae's Encompass allows its customers to
originate loans within Freddie Mac guidelines more easily and with greater
certainty, taking immediate advantage of the new features Freddie Mac is
bringing to market.
FirstClose announced that United Heritage Credit Union has
chosen The FirstClose Report to support all of its Home Equity Lines of Credit
(HELOCs) and Home Equity Loans. The patent-pending FirstClose Report provides
credit union lending operations with instantaneous title search, flood
certification, valuation and property information with $500,000 of lien
protection insurance. Headquartered in Austin, Texas, United Heritage Credit
Union serves communities in Austin, Tyler and Central Texas, and is the next in
a long list of financial institutions who view The FirstClose Report as a way
to gain a competitive edge. "Because The FirstClose Report delivers
everything that it needs to approve these loans instantly, United Heritage
Credit Union can dramatically reduce closing times from 40+ days to less than
10 days. At the same time, The FirstClose Report helps cut costs by an average
of 40% and reduces risk with $500,000 of A+ XIII rated lien protection
insurance per loan."
A Bank of America survey
of Millennials finds their biggest financial concerns are: cost of living
(61%), ability to save (58%), cost of housing (56%), finding new job (49%),
taxes (43%) and losing their job (31%).
Household formation was
depressed during the Great Recession and has been coming back. Housing starts
are still lagging, however. Throw in obsolescence and you have a housing
shortage, which is driving up prices. That pent-up demand is going to get released
as the Millennials age, and that is going to push housing starts up to where
they should be, around 2 million units a year. Of interest to those who like
numbers, Harvard University research finds the median size of a newly built
single-family house has reached a record of 2,467 square feet. This compares to
the median size of a unit in a new multifamily building which has declined to
1,074 square feet.
Plenty of minorities,
Millennials or not, are interested in owning their own home. According to a survey
by Fannie Mae's Economic and Strategic Research Group, many consumers
think it's difficult to get a mortgage in today's market. And forty-five
percent of those respondents cite too much existing debt as a top reason. Yet,
in that same group, more than half don't actually know the maximum
debt-to-income ratio (DTI) required by lenders. The result -- potential buyers
may be wrongly disqualifying themselves before they even apply for a mortgage.
That's why it's key to provide information, resources, and tools to educate
consumers on the mortgage process, and any perceived barriers, including DTI. Download more insight on
DTI and learn about the overall study here.
Just take a look at
recent home sales stats. June's pace of sales was the fastest since February
2007. Supply was down 5.8% y/y, reflecting a continuing problem with inventory.
Dwindling supply helped push prices up 4.8% y/y to $247,700. But first-time
home-buyers rose to 33%, a four-year high!
The problem is there
isn't much on the market first-time buyers can "actually afford" -
that's the single greatest challenge identified by 49% of the agents. New
listings are in price ranges that have moved beyond the reach of many
first-time buyers in most markets. Here is a story from 2015, still very
relevant, & chart of the top seven reasons, as identified by realtors, as the greatest
challenges facing first time home buyers.
There just isn't much
going on with rates, which is fine by most capital markets folks as well as
originators who are more focused on closing their pipelines than on dealing
with rate volatility. Tuesday's bond market barely budged, aside from some
minor price/spread changes between securities and coupons. The risk-free
10-year Treasury-note improved about .125 in price and closed yielding 1.56%;
the 5-year T-Note and agency MBS prices were unchanged from Monday's closing
levels.
On the West Coast plenty
of capital markets personnel are attending the California MBA's yearly Western
Secondary conference, where most of the talk revolves around the disappearing
bid for FHA/VA servicing and the write down of servicing portfolio values.
This morning we've
already had the MBA's report on last week's application data. Applications
plummeted 11%, but overall volume is up 42 percent compared from the same week
one year ago, when rates were higher. Refis fell 15% and purchases dropped 3%.
We've also had June
Durable Goods Orders (-4%, worse than expected; ex-transportation -.5%). Coming
up is June Pending Home Sales, a $15 billion 2-year auction, and the Federal
Reserve's Open Market Committee meeting results: no one expects no change in
monetary policy though forward guidance could be tweaked, in light of recent
improvement in economic data to increase the odds of a September or December
25bp hike in the fed funds range.
In the early going rates
are down slightly. The 10-year is at 1.55% and agency MBS prices better by a
couple ticks - hardly noticeable.
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