A Texan walks into a pub in Ireland and
clears his voice to the crowd of drinkers. He says, "I hear you Irish are
a bunch of hard drinkers. I'll give $500 American dollars to anybody in here
who can drink 10 pints of Guinness back-to-back." The room is quiet and no
one takes up the Texan's offer.
One man even leaves. Thirty minutes later
the same gentleman who left shows back up and taps the Texan on the shoulder.
"Is your bet still good?", asks the Irishman.
The Texan says yes and asks the bartender
to line up 10 pints of Guinness. Immediately the Irishman tears into all 10 of
the pint glasses drinking them all back-to-back.
The other pub patrons cheer as the Texan
sits in amazement.
The Texan gives the Irishman the $500 and
says, "If ya don't mind me askin', where did you go for that 30 minutes
you were gone?".
The Irishman replies, "Oh...I had to
go to the pub down the street to see if I could do it first".
For me the last few weeks included travel to events in Florida,
Texas, Southern California, and now The Mortgage Collaborative's event in
Arizona. And although I wouldn't describe the mood as "vivacious" out
there ("keeping our noses to the grindstone" would be more
appropriate), in terms of demographics I have noticed more and more younger
faces at conferences. Indeed, Pew Research finds that as of the end of last
year there were over 58 million millennial workers in the US labor force, ranking this group #1 in size vs. 53 million Gen X workers
coming in at #2.
In correspondent news, "Do you know what the 'Rule of
72' is? In the investment community, it is a simplified way to determine how
long an investment will take to double, given a fixed annual rate of
interest. Well, at The Money Source (TMS) they have their own 'Rule of
72.' After analyzing 32,891 loans recently purchased by TMS's
correspondent lending division in 2016, an astonishing 72% of all these
loans had a final price equal to original price! It is no surprise they are
now one of the top 10 correspondent lenders for government loans in 2016. TMS
also just rolled out its EASY bulk registration and Excel download PA tool to help
your secondary team and back office save time and energy when delivering loans.
To find out more about how you can deliver loans to an investor who doesn't
nickel and dime you on the backend after loan delivery, email EVP of
Correspondent Sales, Jeff Vanderluit."
In product news, "As lenders look to adopt a truly
automated and more efficient process, the discovery process involves finding a
technology that truly replaces the labor-intensive manual data entry, and not
simply outsources the work to the lowest possible bidder. LoanBeam, a premier provider of mortgage technology
solutions, will be in Las Vegas in Booth #711 of the Ellie Mae Experience
2017 to help lenders identify how to build a consistent, repeatable,
transparent, and more profitable process. LoanBeam's automated income extraction
and calculation is capable of extracting and calculating 100% of borrower's
income through OCR technology refined over 14 years and millions of scanned
income documents. With this type of refinement, LoanBeam accurately pulls
out all relevant income data from any native PDF at a 99.7% accuracy the first
time, with no human touch. For more information about how LoanBeam can
improve your process flow, increase your efficiency, and deliver higher
profitability per loan, visit our site.
And, "With the explosion of millennial buyers, managing
your online reputation is more important than ever. History has taught
us that if you are not managing what people see, your unhappy customers are all
too happy to go to Google, Yelp and the CFPB and damage your reputation and
create endless headaches. SocialSurvey turns this problem into a big opportunity and
will spark a digital transformation for your company. If you want to learn how
to get control of your online reputation, email SocialSurvey."
Bank and M&A news.
Tricon Capital Group announced that it has entered into
an agreement to acquire public single-family rental (SFR) operator Silver Bay
Realty Trust Corp. by way of an all-cash transaction for approximately $1.4
billion, which values the company at $21.50 per share. Tricon Capital indicated
that the acquisition is expected to close by the end of the second quarter of
2017. Tricon Capital is the parent company of Tricon American Homes (TAH),
which is the firm's wholly owned operator of its U.S. single-family rental
business. The acquisition of Silver Bay will create the fourth largest
publicly-owned SFR company. After the completion of the acquisition, TAH
will hold more than 16,800 homes in its total SFR portfolio, of which nearly
9,800 are currently included in three single-borrower securitizations totaling
$1.1 billion.
Is it true that banks are where all the money is? Perhaps.
Banks' profit hit a record high of $171.3 billion last year, a 4.9% increase
from 2015, according to the Federal Deposit Insurance Corp. Unprofitable banks
made up 4.2% of the system, the lowest level since 1995.
Global regulators working on the Basel III banking rules
have ended a two-day meeting without setting a date for their issuance, but
have expressed a determination to reach agreement and
completion, saying that many outstanding matters have been resolved. The US has
not yet appointed a Federal Reserve official who would oversee banking
supervision, and this has been cited as a main reason for the delay.
With hints of lessening regulations (heck, everyone would
be happy if we did away with triple damages with the False Claims Act) will
banks pick up the pace in residential lending? As everyone knows more borrowers
are choosing non-depository lenders than ever before to obtain a home loan. In
2011, 50 percent of all new mortgage loans originated from the three largest
banks: JPMorgan, Bank of America, and Wells Fargo. However, in September 2016,
that share plunged to 21 percent. During that time, non-banks emerged as six of
the 10 largest lenders by volume, including Quicken Loans, loanDepot, and PHH
Mortgage. In 2011, only two of the 10 largest lenders were non-banks.
Obviously, depository banks have a wide range of revenue
earning products whereas the standard mortgage bank only has first liens and
mortgages. Non-banks are a little nimbler and can offer more home loan
products. As depository banks have backed away from the mortgage business due
to onerous and often overlapping & conflicting regulations from the last
ten years, non-bank lenders have filled the void.
Appraisal, collateral, and value trends &
developments
Has the appraisal crunch we had six months ago in many
parts of the nation died down due to volumes falling? To some extent, yes. But
some inherent structural problems remain, and I received this note from the
president of a well-known bank in the West on the lack of new, young appraisers.
"First off, the entrepreneurial return to enter/pursue the business just
hasn't been there. With the 4-year degree and 2-year apprentice requirements
(which many lenders and realtors don't have this level of experience) many
would-be candidates maybe choosing different business lines that can pay them
more much sooner with their experience.
"Along the same line, the appraiser has long been one
of the least underpaid part of the real-estate transaction. Even at
current 'high' fee levels, a '2 appraisal a day' appraiser turning 600 in a
year charging $700/appraisal is making gross $420K/yr. before overhead expenses
and assuming full capacity. Reduce this by 50% for those factors and a very
good appraiser (established with degree and client base) may make $200K/yr. How
many real estate agents and originators make more than this? Lots of them!
"Also, apply this to new folks looking to enter the
market and you can see where it may deter many. The presence of CU and other
automated tools may likely change this landscape dramatically in the next
5-years as appraisers may take on 2 roles: property viewer/certifier of
condition (non-technical), and specialized/unique property appraiser
(specialized and more difficult). Finally, much of this is due to the current
rate environment. If volume slows, the noise is likely to drop a
lot. Experienced appraisers have been through this before and are
unlikely to build up their business when they may have to deal with overhead
cuts soon."
Quicken Loans' National Home Price Perception Index
(HPPI) showed the average appraisal value was 1.47 percent below what owners
expected in January. This two-month drop in the HPPI comes on the heels of a
six month stretch where opinions between homeowner and appraiser were steadily
moving closer to equilibrium. Appraisal values in January stayed mostly
flat, slipping only 0.34 percent last month per Quicken Loans' Home Value Index
(HVI). When viewed annually, appraised values continue to rise, increasing 3.93
percent year-over-year.
Ditech Financial posted a Job Aid when ordering VA appraisals through the WebLGY
application in the online Veterans Information Portal for its Wholesale
Clients. The Job Aid will help clients generate a complete and accurate VA
Request for Determination of Reasonable Value Form (26-1805-1) and reduce
errors that may delay the appraisal inspection and issuance of the VA Notice of
Value (NOV).
Nationstar Mortgage now maintains and distributes a
monthly Appraiser Exclusionary Listin an effort to continue to ensure
collateral quality. Correspondents are encouraged to review the
Nationstar Mortgage Appraiser Exclusionary List prior to submitting a loan for
loan purchase. If a loan delivered to Nationstar utilizes an appraiser on the
Appraiser Exclusionary List, the loan is ineligible for purchase.
Wells Fargo Funding added an authorized appraisal
management companies (AMCs) to include Assurant® Valuations (formerly
StreetLinks) beginning February 14, 2017.
Updates to NYCB's Appraisal Fee Schedule [WSL:652] will be effective
02.20.17 for all new registrations on Table Funding loans and all Correspondent
transactions where the appraisal is ordered through Gemstone.
The Appraisal Fee Screen's functionality at Stearns
was improved to simplify the LE process. Its newest enhancement to SNAP 2.0
enables you to automatically pull the exact Appraisal Fee into your loan based
on the state and appraisal type requested. No matrix or grids to review. To
avoid delays, any LE generated on or after 2/10 will require the new appraisal
fee to be disclosed on your LE. Visit SNAP 2.0 to reference the new appraisal fee schedule.
Effective for Insurance Applications received by MGIC
on or after Feb. 15, 2017, Fannie Mae PIWs will be accepted as meeting the
Underwriting Requirements when offered by Desktop Underwriter® (DU®)
and exercised by the lender in accordance with requirements published in Fannie Mae's SEL-2016-08 and its Selling Guide. Further,
MGIC will not rescind coverage on a loan with an exercised PIW based on a
Material Value Variance, unless fraud, misrepresentation or inaccurate data
were involved in obtaining the PIW or the PIW was not valid under the Fannie
Mae Selling Guide.
Home values influenced by pot? According to a study from
the University of Mississippi and software technology company FNC Inc.,
marijuana legalization could drive housing values up.
Capital markets
By now a March rate hike is nearly fully priced into the
market. At least, if anyone is paying attention to what all the Fed officials
are saying in their speeches it should be. In the last 48 hours, we've had
additional comments by Governors Brainard and Powell expressing support for a
25-basis point rate hike at the March meeting. And to its credit the Fed has
been relatively transparent in their various speeches. With this as a backdrop,
the 10-year note's yield broke 2.50% for the first time since mid-February
closing at 2.49%. (The 5-year note and agency MBS prices worsened about .125.)
The highlight of today's calendar will be the five
scheduled Fed speakers, and we can all expect more hints at our economy doing
well enough for the FOMC to vote for another increase. There aren't any big
scheduled economic numbers coming out, merely some secondary or tertiary
numbers like some Markit Services PMI and ISM Non-manufacturing PMI later in
the morning. In the early going the 10-year is yielding 2.50% and agency MBS
prices are approximately unchanged versus last night's close.
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