"Sometimes I wake up grumpy; other times I let him
sleep." Kids in NY are sleeping in since the schools are closed today. But
if you worked for Deutsche Bank on the mortgage side you may not be sleeping
well: the DOJ is "probing p
"Sometimes I wake up grumpy; other times I let him
sleep." Kids in NY are sleeping in since the schools are closed today. But
if you worked for Deutsche Bank on the mortgage side you may not be sleeping
well: the DOJ is "probing people who worked in DB's mortgage unit." No
one likes being probed. Shifts in minimum wage may be causing people to lose
sleep. Many cities and states have raised their minimum wages in recent years,
but many of those laws leave at least one group out: tipped workers, such as
waiters. The gap is most pronounced in Massachusetts, where minimum wage
earners make $11 per hour while tipped workers make $3.75 an hour.
"I rob banks because that's where the money
is."
If Willie Sutton were alive he could probably count the
number of new, de novo, banks in the last several years on two hands. But things
are heating up, possibly in expectation of an easier
eople who worked in DB's mortgage unit." No
one likes being probed. Shifts in minimum wage may be causing people to lose
sleep. Many cities and states have raised their minimum wages in recent years,
but many of those laws leave at least one group out: tipped workers, such as
waiters. The gap is most pronounced in Massachusetts, where minimum wage
earners make $11 per hour while tipped workers make $3.75 an hour.
"I rob banks because that's where the money
is."
If Willie Sutton were alive he could probably count the
number of new, de novo, banks in the last several years on two hands. But things
are heating up, possibly in expectation of an easier regulatory environment.
The U.S. is seeing startup banks: eight banks filed applications
with the FDIC in 2016. This is a far cry from the peak when you would see
250-300 applications.
One thing non-depository mortgage banks don't have to deal
with is Basel. Bank for International Settlements General Manager Jaime Caruana
expects the Trump administration's approach to regulatory reform to affect
coordination of Basel IV capital rules for banks. "This will probably
take some time, but we need to wait for the position of the Americans -- and we
don't know yet," Caruana said. The word "limbo" popped up, and no one likes
being there.
US bank stress test scenarios for the '17 CCAR (Comprehensive
Capital Analysis and Review) came out. As a reminder to non-bankers, since
non-depository lenders don't have to worry about it, CCAR is a regulatory
framework introduced by the Federal Reserve to assess, regulate, and supervise
large banks and financial institutions. The Fed seems to envision a more severe
downturn in economic conditions compared to the 2016 testing cycle. And we'll probably
see more questions about commercial real estate in 2017 since the '17 CCAR
assumptions include a larger focus on commercial real estate prices compared to
the '16 scenarios.
Certainly depository bank M&A continues unabated.
In Pennsylvania, the Bryn Mawr Trust Co ($3.4B) will acquire Royal Bank America
($828mm) for about $127.7mm in stock (100%) or about 2.47x tangible book. In
Texas Vista Bank ($395mm) will acquire Hamlin National Bank ($84mm). Green Dot
Bank ($1B, UT) will acquire prepaid debit card company UniRush, LLC for $147mm
in cash and an earn-out of at least $20mm. UniRush has 175,000 active cardholders,
offers RushCard and is backed by hip-hop mogul Russell Simmons. In Illinois
Multi-bank holding company First Busey Corp ($5.4B) will acquire First
Community Financial Bank ($1.3B)
for about $235.8mm in cash (10%) and stock (90%) or about 2.1x tangible
book.In divestiture news, French bank BNP Paribas will offer 25mm shares of its
subsidiary First Hawaiian Bank (HI) as it seeks to reduce its roughly 83%
ownership stake down to about 62% and raise an expected $984mm. Dutch banking
giant ABN Amro said it will cut 60% of its senior management jobs and cut the
number of top executives by 50%, as it moves to cut costs. The bank remains 70%
owned by the Dutch government.
Servicing prices influences borrower's rates.
Let's see what's been happening over the last month or
two. The talk a few months back in MSR trading wasn't credit or prepayment
speeds, necessarily, but rather the size of offerings. MountainView
Servicing Group was the exclusive sales advisor to a $3.19 billion
FHLMC/FNMA/GNMA servicing portfolio. The 100% retail originated portfolio
consists of Conventional: 100 percent fixed rate 1st lien product,
3.875% WAC, 752 WaFICO, 78% WaLTV, $191k avg loan amount, with top states:
Texas (27.2 percent), California (8.0 percent), Virginia (6.0 percent), and
Maryland (4.7 percent); and Government: 100 percent fixed rate 1st
lien product, 694 WaFICO, 96% WaLTV, 3.78% WAC, $177k avg loan amount, with top
states: Texas (20.8 percent), Florida (7.4 percent), California (7.2 percent),
and Ohio (5.2 percent).
I've seen two Incenter Mortgage Advisor packages;
the first was for $1.45 Billion in Fannie Mae & Freddie Mac Bulk MSR
offering. The 6,500-loan package had a $222k average loan amount, 4.151% WAC,
90% O/O SFR, 77% purchase, 77% WaLTV; the second offering is for a $4 Billion
FHLMC 23,000+ loan package. The portfolio has a 3.952% WAC, 76.6% WaLTV, 752
WaFICO, 92% O/O, 67% SFR 27% PUD, 56% Purchase, and a current escrow balance of
$29mm.
Phoenix Capital's Project Valor: a $2.4 Billion
GNMA, 98% Fixed 30, 1% Fixed 15, <1% ARM, 3.837% (F30) Note Rate; 3.408%
(F15) Note Rate; 3.134% (ARM) Note Rate, $200k average loan amount, 684 WaFICO,
99% WaLTV, Geography: 9% TX, 9% FL, 6% GA, and is 100% retail. Project Sparta
is a $35-60 Million per month flow package. The seller estimates the flow will
be on average similar to October through December production; Conventional:
approximately $30-$35 million per month, 84% Fixed 30, 16% Fixed 15, avg bal
$232K - $269K, 56% purchase origination, 100% retail originations, 90% single
family/PUD properties, 91% OO, 42% MD, 40% VA, 12% NC, 750 WaFICO, 79% WaLTV; Government:
approximately $20-$25 million per month, 59.7% VA, 36.6% FHA, 3.7% USDA, avg
bal $245K - $252K, 82% purchase originations, 100% retail originations, 94%
SFR/PUD properties, 99% OO, 39% VA, 36% MD, 19% NC, 705 WaFICO, and 97% WaLTV.
RoundPoint Mortgage Servicing has been selected as
the sole servicing partner by Point, for its growing portfolio of fractional
residential real estate assets. Under the agreement, RoundPoint will manage
assets acquired by Point. Homeowners sell Point a fractional interest in their
properties in exchange for a tax-deferred lump sum without interest rates or
monthly payments. Within 10 years, the homeowner exits the agreement by either
selling their home or buying out Point. Most homeowners use the capital to
diversify their wealth, invest in their businesses, renovate their homes, or
pay off debts. Point provides homeowners with a brand- new finance solution
that aligns homeowner and investor interests and, for the first time, investors
can buy fractional interests in owner-occupied residential real estate through
a digital platform.
The weather outside is frightful...
This winter has been harsh in most parts of the country.
Even California, at least the northern portion, has seen an unusual amount of
rain and snow. What are lenders and investors doing in terms of disaster
updates? Hey, and don't forget, if you need a flood map, FEMA's your place!
In response to the severe storms, tornadoes and
Straight-line winds and in response to a Federal Disaster Declaration, M&T
Bank will enforce the Disaster Re-Inspection Policy for all Georgia
properties located in the counties of Berrien, Cook, Crisp, Dougherty, Turner,
Wilcox. The same is true for Mississippi Counties of Forrest, Lamar,
Lauderdale, Perry.
Because of severe storms, tornadoes and
straight-line winds in Georgia (Georgia Severe Storms, Tornadoes, and
Straight-line Winds (DR-4294 and DR-4297), FEMA declared a major disaster
area. Loans scheduled to close in these areas may need to be delayed until
confirmation of the property's condition can be obtained. Plaza will
reassess the collateral for these loans and prepare them for closing as soon as
possible.
The SunWest Mortgage disaster area policy is as
follows: For loans submitted with an appraisal dated on or before the incident
period end date or for those submitted without an appraisal, Sun West will
require an interior and exterior inspection prior-to-funding or purchase of any
loans with subject properties that are determined to be at risk. The inspection
must verify that the property is sound, habitable and in the same condition as
when it was appraised.
Per FAMC's Correspondent Lending Bulletin,
effective immediately, a buyer will be allowed to assume the seller's flood
insurance policy and retain the same rates provided the loan is not a
construction loan and the policy states it is transferrable. Please review the
updates to the Flood Disaster Protection Act chapter of the manual for specific
requirements. Also, FAMC has updated its guidelines to align with FHA's
current 4000.1 policy, as announced in FHA INFO#16-64. The total amount of
required repairs must not exceed $10,000 for HUD REO properties insurable with
a repair escrow.
NewLeaf issued the following information regarding
active loans in the pipeline: Because of Severe Storms, Tornadoes, and
Straight-Line Winds occurring in Georgia from January 21, 2017 (incident
start date) through January 22, 2017(incident end date), the President
issued a federal disaster declaration on January 26, 2017 for the following
counties: Berrien, Cook, Crisp, Dougherty, Turner and Wilcox. All subject properties in the areas impacted by the disaster require evidence that
the subject sustained no damage from the identified disaster. If the
subject property is in an impacted area, with a completed appraisal dated
prior to the incident start date, a 1004D re-inspection completed by the
Appraiser must certify that the property is free from the applicable natural
disaster damage.
Capital Markets: interest rates go up and down
And this week it's been down. Those who follow the 10-year
yield as a benchmark saw its yield hit 2.33% Wednesday morning. Why? Lack of
turmoil overseas, perhaps. Or some thinking that the expected "Trump
Bump" to the U.S. economy may not happen overnight. Who thought it would?
We had the usual small movements between coupons, securities, and maturities,
and the NY Fed was in doing its usual buying of $1-2 billion a day. The improvement
paused when the Treasury auctioned off its 10-year T-note, but its yield still
ended the day at 2.35% and its price improved nearly .375. The 5-year T-note
and agency MBS prices improved .125-.250, depending on coupon.
This morning we've already clocked in with the usual
Thursday Initial Jobless Claims (-12k to 234k; 101 weeks below 300k). At 10AM
ET we'll have December wholesale inventories, as if that stat ever moves
markets, but later we'll have the Treasury peddling $15 billion of 30-year
bonds. The 10-year's yield is sitting around 2.36% and agency MBS prices are
down/worse .250 versus Wednesday's close.
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