The last time I checked Americans enjoy living indoors,
especially given storms like today's in the Northeast. How's this for a
combination of edifices and technology: If you think you don't understand how
blockchain works, how about 3-D printers? Here's a printer that printed an entire house in
24 hours!!
Trainings and events:
You are cordially invited to Michigan
Mutual Inc.'s first ever 203k Training Extravaganza! Director of Wholesale
Lending, Greg Campbell, will offer his expertise as he takes you step by step
through his 203k process. Please join us at the Westin Hotel
(Southfield, MI), or tune into the presentation live from your computer,
Monday, March 20. Lunch will be served at 11 a.m. and the presentation will
take place from 12 p.m. - 1 p.m. RSVP here. We hope to see you all there!Michigan Mutual is an agency direct/seller/servicer/issuer
established in 1992 and based in Port Huron, Michigan.
Are you ready for the Spring rush? Essent's
training department would like to help you prepare for success with many course options available to you in March through
Essentials training.
Join Vantage Production President
& CEO Sue Woodard as she uncovers top profit-enhancing strategies from the
Vantage Production Expert Faculty, in the fast-paced, value-packed webinar,
"Top Producers Panel: 12 Money-Making Strategies From the Vantage
Production Faculty" on Tuesday, March 14th at 3PM ET; click here to register now!
Fannie Mae is offering a webinar presented by its
Servicer Support Center, to help get started and access the reports in Fannie
Mae Connect. Learn more and register for
a webinar on March 23 or March 27 at 2:30 p.m. ET.
You say you've always wanted to meet former Denver Bronco
Terrell Davis? Your opportunity awaits at the 26th Annual Rocky Mountain Mortgage Lender Expo on
Thursday April 20th.
Focus on Assets with Plaza's March 14th
webinar. This module will look at eligible sources for funds to close and
reserves (if applicable) as well as the requirements for asset documentation.
The course is designed for the participant to gain an understanding of eligible
and ineligible sources of funds, interested party contributions (IPC's), what
constitutes a "large" deposit, using retirement funds for closing vs.
reserves, earnest money deposits, and acceptable documentation for assets.
Consumers' FICO Scores can provide insight and perspective
on their future behavior. Check out MGIC's webinar, with Mike Olden,
American Reporting Company's Vice President - Sales and Education. There
are 3 webinars to choose from: Wednesday, March 15th,Tuesday, March 21st, or Tuesday, April 18th. Get updated on FICO
score and credit updating.
Looking for a 203K training? Check out Sun West's training calendar.
M&A update
In the last week or so it has been relatively quiet on the
bank side of things. But we've seen two big bank deals. It was announced
that Iberiabank ($21.6B, LA) will acquire Sabadell United Bank ($5.8B, FL) for
about $1.03B in cash (78%) and stock (22%). And Sterling National Bank ($14.2B,
NY) will acquire Astoria Bank ($14.5B, NY) for about $2.2B in stock (100%) or
about 1.6x tangible book. In addition, Customers Bancorp (Wyomissing, PA) will
be selling its BankMobile Division to Flagship Community Bank (Clearwater, FL).
On the flip side, Proficio Bank ($68.2mm, UT) was closed last Friday and the
FDIC sold it to Cache Valley Bank ($374mm, UT) under a purchase and assumption
agreement. Cache Valley Bank gets the sole branch, $65mm in deposits and
$60.1mm of the assets of the failed bank.
Whether a bank with a mortgage arm, or without, what are
the "Top 10 Worst Seller Characteristics?" STRATMOR's Jeff Babcock had an answer as to what practices
tend to deter buyers, thereby reducing a seller's marketability, and detract
from a given seller's enterprise value.
"The first is that a substantial portion of
production volume is originated in DBA branches and/or 'for-profit' branches.
By comparison with branches which are branded with the corporate identity, DBA
and for-profit branches are perceived as less loyal and greater flight risks,
even though the data suggests that that might not necessarily be true.
Originator compensation plans where the Loan Officer can select options tied to
revenues (aka 'pick-a-pay plans'). Such plans are typically categorized as
non-compliant by buyers in spite of the fact that some such plans may have been
vetted by the seller's attorneys.
"Any degree of pricing variance within a given MSA
creates a potential exposure to Fair Lending compliance. Arrangements where the
branch manager and/or loan officer can select the investor. Such arrangements
generally work against secondary marketing best execution and can be a source
of cultural problems. An exempt sales force (e.g., originators designated as
'outside sales people'). Buyers have learned that an exempt sales force
increases exposure to class action lawsuits initiated by originators.
"Situations in which seller's executives and/or
selling shareholders account for a substantive share of current production
introduces a degree of difficulty to the negotiating process. Situations in
which the seller's geographic production footprint is scattered are generally
not viewed favorably. Buyers strongly prefer to acquire a lender that has
established a significant market presence in few selective markets.
"The existence of a major legal matter or regulatory
action which cannot be resolved or settled prior to the closing date can be
problematic. Buyers prefer that ownership of the selling entity be concentrated
in the hands of a few players. Multi-ownership (say more than five
shareholders) increases the complexity of the negotiations. Existence of an
Employee Stock Ownership Plan (ESOP) generally renders the seller to be
unmarketable."
Jeff's answer wrapped up with, "While many of the
impediments to a lender's marketability can be characterized as 'low hanging
fruit' that can quickly be corrected, many lenders will have impediments that
simply cannot be eliminated or require substantial time and attention to
remedy. What is important, in STRATMOR's opinion, is that lenders objectively
and periodically assess their marketability as part of their strategic planning
and build appropriate actions into their operating plans."
Do you think that "trimming a little fat" off
your budget is relatively straightforward and easy? What about $6 billion
dollars' worth? Under Donald Trump's proposed budget HUD will get about 14% less than last year. It looks
like most of the cuts will fall on community development block grants and
public housing maintenance. It doesn't appear (at least initially) that the
mortgage side of things is affected at all, although government housing
advocates are upset.
And here's an interesting observation about FHA loans:
"...some borrowers have begun to refinance out of FHA loans
following a change to the FHA policy on mortgage insurance cancellation that no
longer allows borrowers to drop mortgage insurance coverage when they reach 20%
equity. So the only way to stop paying the standard 85-basis point premium on
the average FHA loan is to refinance into a conventional loan with LTV of 80
percent or less. And that's exactly what in-the-money FHA borrowers are doing.
They are refinancing into conventional loans, spurred on in part by
the incentive of dropping their mortgage insurance premium."
FHA is in the final stages of the technology
development for the new Loan Review System (LRS), and will soon be announcing
the system implementation date. Lenders will use LRS to interact with FHA on
most Title II Single Family quality control processes, including: Various
Post-Endorsement Loan Reviews, Unconditional Direct Endorsement Authority Test
Cases, Lender Monitoring Reviews and Lender Self-Reporting of Fraud and Other
Material Findings. LRS will not be used to manage any
aspect of FHA's standard (non-test case) loan origination or endorsement
processes.
Ginnie Mae has added "Multiclass Securities Guides Update." Which leads us
to...
Capital Markets Update
Despite a decline in monthly securitizations guaranteed by
the Government National Mortgage Association, the Ginnie book of business reached a record. As of Jan. 31,
there were $1.79 trillion in Ginnie Mae mortgage-backed securities outstanding,
per data from the Washington-based firm. That marked the biggest book of
business ever for the government-owned corporation based on its own historical
numbers going back to 1990.
Rain or shine, high rates or low, the NY Fed continues to
buy securities, adding to its balance sheet. When the Fed will stop, no one
knows for sure, since it is dependent on our economy's strength, as well as
overseas event beyond the control of anyone in this country. And there exists
the small possibility that it could sell assets. As to the timing of all this,
Morgan Stanley ventured a guess as to when the Federal Reserve will stop its MBS reinvestments: 2018. Its
team of actuary folks and economists think that the Federal Reserve is on
course to end reinvestments of its mortgage-backed securities holdings next
year, as policymakers attempt to shrink a balance sheet that swelled following
the financial crisis.
Most of 2017 has seen the benchmark 10-year T-note, a
proxy for all rates, trade between 2.30% to 2.60%. We're above that now after
it hit 2.61% Thursday. It didn't help anyone looking for lower rates that in
Europe, European Central Bank President Mario Draghi said that they are
forecasting faster growth and inflation in 2017 and 2018 than they had
previously. (The European Central Bank's Governing Council decided to keep
monetary policy on its current course.) The U.S. economic data was very light
although import prices excluding oil and export prices excluding agricultural
both climbed by 0.3% m/m in February. Initial jobless claims remain near
four-decade lows and the data series is losing its value for a variety of
reasons.
By the time the proverbial dust settled yesterday the
10-year note had worsened .375 to yield 2.60%; 5-year T-notes and agency MBS
prices worsened nearly .250 resulting in plenty of intra-day price changes.
This morning we had out monthly set of employment data - full
speed ahead for a Fed hike next week. Nonfarm Payrolls, expected +200k,
came in at +235k. Hourly Earnings, expected to increase slightly, were indeed
+.2%; the Unemployment Rate, expected to remain unchanged at 4.8%, dropped to
4.7%. And after yesterday's run up in rates, and this morning's unemployment
data, we find the 10-yr waffling around 2.59% with agency MBS prices
surprisingly better by .125 versus last night's close.
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