Thank you to Patti C. for this one.
A husband and wife who work for the circus
go to an adoption agency. Social workers there raise doubts about their
suitability.
The couple produces photos of their 50-foot
motor home, which is clean and well maintained and equipped with a beautiful
nursery.
The social workers raise concerns about the
education a child would receive while in the couple's care. "We've
arranged for a full-time tutor who will teach the child all the usual subjects
along with French, Mandarin, and computer skills."
Then the social workers express concern about
a child being raised in a circus environment. "Our nanny is a certified
expert in pediatric care, welfare, and diet."
The social workers are finally
satisfied.
Then they ask, "What age child are you
hoping to adopt?"
"It doesn't really matter, as long as
the kid fits in the cannon."
Every lender should know a little about demographics. The
Millennials receive the publicity, but the population aged 65 and older is
expected to grow by 66 percent through 2035, an increase of more than 31.4
million. Given that the entire adult population is projected to grow by 49
million during this twenty-year period, the disproportionate rise in the cohort
aged 65 and older will shift that group's share of the population from 15
percent to 21 percent.
Looking for some good news? This is from Ralph
DellaCamera, Chairman of Stamford, CT and San Diego, CA-based mortgage holding
company National Asset Direct and its iServe Subsidiaries. Checkout this timely
and informative video entitled "Why We're Bullish on the Mortgage Market".
In it, Ralph explains, with U.S Census industry data and full visual support,
why he believes the best days are ahead for the mortgage industry. In
fact, to support this position.
In product developments, "for the past 5 years Mortech has been delivering 'best in class'
mortgage data APIs, and has recently started expanding their mortgage data API
offerings. Using these APIs, Lenders are now able to integrate their Buy
Side/Sell Side rate information, lead capture, and loan officer directory to
custom lender websites, Smart Applications, Loan Origination Systems, and
Secondary platforms. Looking for a single source to manage your online
rate quoting experience? Mortech is also the trusted source to get your
mortgage rates out to sites like Zillow, LendingTree, QuinStreet, and Smart
Asset, processing millions of transactions daily." Interested in learning
more about Mortech APIs? Reach out to Josh Lehr at Mortech today.
Lots of companies are out there trying to retain key
employees and let others look for jobs. "Is the grass greener on the other
side for your employees? A 40% Loan Originator turnover rate in STRATMOR's
2016 Compensation Connection indicates it may be for some. Participate in
the 2017 STRATMOR Compensation Connection to find out how your
turnover rate compares to peers. In addition to turnover rates, productivity,
total compensation and incentive structure, this year delves deeper into
benefits to look closer at PTO, Healthcare, 401K, and Educational Assistance
offerings by lenders. Don't miss out on your chance to find out how your
compensation and benefits compare to industry standards and peers. To
participate, visit our site; for questions regarding this program,
please email
us here."
The servicing markets
The servicing market continues to be the subject of conversation.
With $1.6 trillion (yes, with a "t") of servicing Wells Fargo is
still the alpha gorilla. But non-banks such as Freedom Financial (with roughly
$100 billion in servicing) continue to gain ground, and there are plenty of
companies servicing a billion or less who prefer it on their balance sheet. In
general non-depository banks work hard in developing customer loyalty but
typically don't have other services to sell customers such as car loans,
personal loans, checking accounts, and the like.
In terms of value, it hasn't changed much for current note
rates: give or take, it seems to be clustered around 4:1 (meaning current
agency servicing is worth about a point). What buyers will pay, however, for
something worth one point fluctuates between .75 and 1.25 depending on the
state mix, age, delinquency, borrower characteristics, etc. And buyers continue
to look at the operational risk of servicing a portfolio of loans.
What has garnered a fair amount of attention is the
lukewarm market for Ginnie Mae servicing in recent months. Some servicing
advisors tell clients to hold onto it if they can. Per Inside Mortgage Trends,
Ginnie Mae "flow" transfers (a measurement of sale activity) fell to
$8.03 billion in the fourth quarter of 2016, the lowest quarterly reading of
the year. Bulk activity was healthier at $30.1 billion in 4Q16, but some of
that is attributable to one seller offloading a large portfolio. The quarter
prior just $8.9 billion in Ginnie bulk rights changed hands.
A while back, although still very relevant, Fitch
predicted that origination activity will fuel nonbank servicing growth.
While nonbank servicers are expected to continue to gain greater market share
in 2017, much of that growth will come from their own loan origination activity
rather than mortgage servicing rights purchases and subservicing. Nonbank
servicers have grown their market share from 4% to 32% between 2008 and 2015
through MSR and subservicing deals.
myCUmortgage announced that it has launched its new
mortgage servicing operation that will re-design the options available to
credit unions for servicing. myCUmortgage is a leading Credit Union Service
Organization (CUSO), wholly-owned by Wright-Patt Credit Union. "By
building a mortgage servicing operation, myCUmortgage can now use its
member-centric approach to help credit unions service their members' mortgage
needs. Some benefits include a cooperative pricing model where servicing costs
for all client credit unions are lowered as myCUmortgage volume rises. Self-service
tools to assist members at the point of member contact, including the ability
to accept payments in the branch, regardless of whether the loan is a credit
union portfolio or has been sold to an investor. Access to a series of reports
and dashboard tools to better manage their mortgage programs."
Let's see what the servicing brokers have been up to in
recent months.
MountainView Servicing Group recently had three MSR
packages out for bid. The first a $1.12 Billion FNMA/FHLMC non-recourse
servicing portfolio. The package was a 100% fixed rate 1st lien
product package, with a 762 WaFICO, 70% WaLTV, 3.36 WAC, low delinquencies,
average loan size of $260k, with top states: California (12.0 percent), South
Carolina (7.4 percent), Florida (6.3 percent), and North Carolina (5.7
percent). The second was a $491 million FHLMC/FNMA non-recourse servicing
portfolio which was a 99.9% fixed rate, 100% 1st lien product,
with a 4.38 WAC, 726 WaFICO, 82% WaLTV, low delinquencies, average loan size of
$158k, with top states: Texas (13.9 percent), California (7.7 percent), New
Jersey (7.4 percent), and Oregon (5.7 percent).
Finally, the third package was a $920M FNMA/FHLMC,
93% Fixed Rate, 100% 1st lien product, with 753 WaFICO, 72% WaLTV,
3.82 WAC, no delinquencies, average loan size of $200k, with top states:
California (22.9 percent), Texas (10.3 percent), Pennsylvania (5.9 percent),
and Illinois (4.5 percent). Incenter Mortgage Advisors offered a $1.2
Billion Fannie Mae/Freddie Mac Bulk MSR portfolio. The 4,872-file package
originated from an independent mortgage banker with strong net worth. The pool
has 8 mos. of seasoning, with a 3.857% WAC, 737 WaFICO, 70% WaLTV, a $241k
average loan balance, with top states: California (52%), Texas (8%), Florida
(5%) and Michigan (4%).
Phoenix Capital's Project NEMO was a $478M Fannie Mae
and Freddie Mac bulk MSR package. The portfolio was 73% FNMA, 27% FHLMC 91%
Fixed 30, 8% Fixed 15, 1% ARM, 4.279% (F30) Note Rate; 3.527% (F15) Note Rate;
3.522% (ARM) Note Rate 0.251% wAvg Net Service Fee Avg Bal $262K Geography: 88%
CA, 3% FL, 1% AZ, 726 WaFICO, 74% WaLTV, 80% Single Family/PUD Properties, 84%
O/O, 39% Purchase Originations 100% Wholesale Originations. Prestwick
Mortgage Group was the exclusive broker for a bank offering a $57
Million Pennsylvania FHLMC ARC package. The total portfolio had a 4.23 WAC,
$100,776 average unpaid principal balance, 0.2500% weighted average net service
fee, all loans except for one in Pennsylvania, 1.426% delinquency ratio - all
30-day delinquents - with no foreclosures, 763 WaFICO, and a 63% WaLTV.
Capital Markets
Secondary marketing staffs continue to try to eke out
every basis point in execution. But there are a few global trends that should
help pricing to borrowers, since demand in the secondary markets are a
significant part of interest rates. These have been going on for quite some
time, and will continue through 2017 and beyond. For example, here's an article
titled, "Alignment, Uncertainty Challenge GSE Single Security
Initiative."
And we have Fannie Mae and Freddie Mac, backed by the tax
payer due to being in conservatorship, continuing to transfer credit risk away
from the public and to investors willing to pay for it. Faith Schwartz's third
instalment in her monthly CRT series is titled, "Credit Risk Transfer in a New World - The Waterfall of
Risk Falls Squarely on Private Capital."
In terms of rates themselves, I noticed several intra-day
price changes for the worse yesterday as Treasury yields remain at or near
52-week highs. Investors seem to be downplaying cheaper oil's potential
dampening effect on inflation and instead focusing on a robust U.S. labor
market that might cause the Fed to hike four times this year - starting
this week. For example, yesterday we learned that the Conference Board's U.S.
Employment Trends Index rose to 131.39 in February from 129.91 in January - the
highest in 16 years.
If you like numbers, Monday the 10-year note worsened
nearly .250 to yield 2.61% and 5-year notes worsened about .125. But agency MBS
prices sold off nearly .250, mimicking the 10-year for a change.
This morning we've seen the NFIB Small Business Optimism
Index remaining near its 12-year high. Not that it will influence the Fed this
week, but we've also had our read on inflation with the February Producer Price
Index (+.3%, strong; +2.2% year-over-year). We're starting the day with
Stella in the Northeast and with the 10-year at 2.61%; agency MBS prices are
little changed from last night.
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