Webinars, Conferences, and Training Coming Up, Politically-Related Thoughts On Lending Continue

By rchrisman@robchrisman.com

From Louisiana comes, "I doubt that HUD will be a high priority for Trump - perhaps it will be like Ronald Reagan's view. Remember the story that President Reagan was making his way down a line of mayors visiting the White House, shaking hands, when he came to Samuel R. Pierce Jr., his Secretary of Housing and Urban Development. 'Hello, Mr. Mayor,' Mr. Reagan said to Mr. Pierce." Speaking of the government, does the average government-guaranteed loan have 150 documents? The person interviewed in this article believes so. Along those lines, ever wonder why non-depository online lenders are attracting the scrutiny of regulators? Research by KPMG finds nonbank online companies arranged about $36B of loans in 2015 vs. about $11B in 2014.

In product news, Nations Direct Mortgage is proud to announce its partnership with Freddie Mac and MGIC for their newest product offering, Freddie Mac's Home Possible Advantage. This robust program provides affordable lending opportunities for today's underserved homebuyers using flexible options such as low down payment requirements and reduced MI capabilities. "Last month, 47% of our business were first time homebuyer transactions, and with this new program we expect to significantly broaden our brokers and correspondents' reach so they can capture even more borrowers," said Martin Warren, Director of Lending. To learn more about Home Possible Advantage contact Martin at martin@myndm.com.

 

In Indiana Evansville Teachers Federal Credit Union acquired First Liberty Financial Mortgage, a regional mortgage firm founded and headquartered in Owensboro. Credit union officials say they expect the acquisition to nearly double mortgage production from $30 million to $55 million a month.

 In other company news, Incenter LLC, a provider of capital markets and fulfillment services for mortgage lenders and specialty finance companies, announced that it has acquired Boston National, a Charlotte, NC-based provider of title and settlement services. "The acquisition will allow Incenter to expand its current capabilities and to continuously optimize mortgage lending for productivity and profitability. Boston National CEO John Keratsis will join Incenter focusing primarily on the strategic integration of the title and settlement process with Incenter's other service offerings."

The California MBA Annual Legal Issues & Regulatory Compliance Conference is next week, December 5-6 in Costa Mesa, CA.

 Spanning 6 days in December and covering 7 topics, Check out Plaza's Webinar schedule for the first half of December.

 Join Black Knight Financial Services on Thursday, Dec. 8, at 2PM ET for an insightful CBA Webinar about the hidden opportunities to be realized from performing, crisis-era subprime borrowers with 10-year payment histories on high-interest-rate mortgages. Industry veterans Julian Grey and Conrad Ficca from Black Knight Financial Services will show how refinancing this market segment into new loans with risk-based pricing can effectively reduce a lender's future risk of default and improve the borrower's situation.

 Join National MI on Thursday, December 8^th to discuss Multicultural Marketing for Mortgage Professionals.In this 1-hr session, participants will learn practical differences in the consumer experience, pertinent cross-cultural communication skills, and actionable strategies to capture more mortgage business from these segments.

 And the following week National MI is providing a 2-hour webinar, Wednesday, December 14^th. Completing the URLA: A Step by Step Guide to an Accurate Mortgage Application led by Teresa Ferman of Indecomm.

Switching gears from the next few weeks to the next four years, given the significance of the Presidential election, the mortgage industry is optimistic that the new Administration and a Republican Congress will take steps to improve homeownership and reduce regulatory burdens. While many uncertainties remain, Zelman & Associates expect a softer enforcement environment will encourage more lending on the margin and a greater role for private capital. Conversely, higher interest rates may pose risks depending on the trajectory of further increases but a more competitive purchase market and less regulation could result in tighter spreads and increase the credit box.

 

Therefore, in the coming years, Zelman expects the purchase market to experience steady growth while refinance volume declines, supporting our outlook for increased competition for purchase business. Within the purchase market, it expects growth to be skewed towards low down-payment mortgages as the share of first-time buyers expands, directly benefitting the private mortgage insurers. Importantly, feedback from its survey of mortgage lenders continues to suggest that the pool of applicants is expanding as entry-level and marginal credits reenter the market. Zelman & Associates believe there is significant runway for credit quality to responsibly normalize from today's historically-high levels and expect that the guardrails established by Qualified Mortgage standards will maintain a high floor on underwriting. Although commentary around sweeping changes related to Dodd Frank and the CFPB are top of mind, Zelman believes changes will be on the margin as many lenders are supportive of many aspects of both.

 It seems like everything you read nowadays is either about the election or the interest rate hike. U.S. data is certainly leading to a December rate hike. After a weak first half of the year, 3Q real GDP growth improved to a 3.2% annualized rate. Payroll job growth was strong in the 3Q, averaging 206,000 net new jobs per month and the unemployment rate averaged around 4.9%. While the October job growth was down slightly adding 161,000 jobs, it is still evidence of a tightening labor market. All that is needed is another few weeks of benign or strong economic data.

 It's been three weeks since the presidential election, and...Well Mr. Trump, YOU'RE HIRED. Regardless of your political views, unless something extraordinary happens in a recount, Donald Trump is the new president of the United States. Now, what does that mean for the markets. Think back: the entire night of election brought uncertainty and we watched the futures market crash. However, the morning after the election the Dow went up 300 points to an all-time high. But, with Donald Trump as the President-elect, the potential for major economic policy changes brings about heightened uncertainty in the near-term as the markets incorporate the new administration into the outlook.

 With three weeks of volatility and reports of strong U.S. financial market performance, everyone expects the fed to raise rates in December. Donald Trump's surprising victory will have little direct impact in the near-term but will likely have a more significant impact on the medium-term outlook. Uncertainty is likely to rattle the markets, but many economists expect the impact to be short-lived. They look for the financial markets to sync with Trump's economic policies of lower taxes, infrastructure and defense spending, regulatory reform and a new deal on international trade. And that is exactly like the bond and stock markets have been trading.

 Volatility has certainly picked up. Yesterday, for example, the 5 and 10-year notes led the Treasury market higher during a session with no significant U.S. economic releases. There was no substantive news, and most of the headlines were focused on the possibility of an agreement among OPEC producers to limit or reduce supply at their meeting on Wednesday. Where have we heard that one before? And remember the concern over Brexit? European Central Bank President Mario Draghi said that the Eurozone economy has proven resilient in 2016 and that the global economy should continue to recover. He said that much of the Eurozone recovery can be attributed to ECB policy.

 

In the United States, mortgage-backed securities put in one of their more impressive performances in the last three weeks. Wall Street folks with whom I spoke talked about the market "being overdone on the downside." Investors came back after a holiday weekend, and found that there wasn't a lot of selling going on - and the Fed is still buying a billion or two a day of agency MBS and production is down. Declining volatility also helped. The 10-year note improved almost .5 in price Monday to yield 2.32%. Agency MBS prices and 5-year notes improved roughly .250 but where all over the map depending on coupon, maturity, and type of security. Watch those cross-hedges!

 We've had some news today, not that it will really impact the odds of a Fed increase in a few weeks (100%). We've seen the second update to Q3 GDP (+3.2%, stronger than expected). Coming up are some store sales numbers along with the S&P/Case-Schiller Home Price Index for September and November Consumer Confidence. The 10-year is currently yielding 2.35% and agency MBS prices are worse about .125 from Monday evening.