(Warning: rated PG for sexual situations.)
Little Bruce and Jenny are only 10 years
old, but they know they are in love.
One day they decide that they want to get
married, so Bruce goes to Jenny's father to ask him for her hand.
Bruce bravely walks up to him and says,
"Mr. Hannon, me and Jenny are in love and I want to ask you for her hand
in marriage."
Thinking that this was just the cutest
thing, Mr. Hannon replies, "Well Bruce, you are only 10. Where will you
two live?"
Without even taking a moment to think about
it, Bruce replies, "In Jenny's room. It's bigger than mine and we can both
fit there nicely."
Mr. Hannon says with a huge grin,
"Okay, then how will you live? You're not old enough to get a job. You'll
need to support Jenny."
Again, Bruce instantly replies, "Our
allowance. Jenny makes five bucks a week and I make 10 bucks a week. That's
about 60 bucks a month, so that should do us just fine."
Mr. Hannon is impressed; Bruce has put so
much thought into this.
"Well Bruce, it seems like you have
everything figured out. I just have one more question. What will you do if the
two of you should have little children of your
own?"
Bruce just shrugs his shoulders and says,
"Well, we've been lucky so far."
Mr. Hannon no longer thinks the little
"stinker" is adorable.
The Trump administration is working to revise or replace the Dodd-Frank Act, President Donald
Trump told a group of CEOs. House Financial Services Committee Chairman Jeb
Hensarling has announced the latest draft of his Financial CHOICE Act, which is
intended to overhaul post-crisis regulation. A new Republican plan to
streamline Dodd-Frank's capital rules, stress tests and many other requirements
will be reintroduced in the coming weeks. There are many problems, of course,
not the least of which is that much of DF helps the consumer, and financial
service companies have already spent countless millions, if not billions, of
dollars conforming to the rules which has been passed on to us consumers.
"Revise" is more likely than "repeal."
"The National Warehouse Lending Division at PlainsCapital Bank
is excited to be a premier warehouse provider for renovation programs. 203K
Full, Limited, FNMA HomeStyle or a HUD REO in need of repairs, PlainsCapital
Bank Warehouse Lending is ready to provide a facility for these
programs. In a housing market with low inventory and home values
increasing month over month renovation programs provide a great opportunity for
our originating partners to market and capitalize on borrowers looking to use
their home equity to update and renovate their homes. We believe in
creating great opportunities and strong relationships with our mortgage banking
partners. If you are interested in a new residential warehouse lending
experience, please contact Pamela Robinson, National Sales Manager, or apply online
through our website PlainsCapital Bank National Warehouse Lending Division.
Get to know the PlainsCapital Bank SWAGGER on LinkedIn at PCB NWL."
Bank news
We aren't the only country with regulators creating rules
for residential lenders. In Australia the bank regulator, APRA, released a new set of macro-prudential rules for mortgage lending in
Australia. The broad intention appears to be facilitating the supply of credit
into the housing market (especially given the forthcoming supply in apartments)
while trying to improve the average quality of lending.
And just this morning American Banker carried a story
noting, "A carve-out that shielded billions of dollars in collateralized
loan obligations from Dodd-Frank's risk-retention mandate could work against
banks and other CLO managers if Dodd-Frank is overhauled."
The US and Europe are becoming hesitant to adopt the Basel Committee on Banking
Supervision's capital requirements, which could leave Asian banks the only
institutions adopting the international standards, experts say.
Mergers and acquisitions have slowed in the last
week or so, probably due to Spring Break. It was announced, however, that in California
Pacific Western Bank ($21.9B) will acquire California United Bank ($3.0B) for
about $705mm in cash (30%) and stock (70%) or roughly 2.84x tangible book. In
Indiana, the Fountain Trust Co ($295mm) will acquire The Farmers State Bank
($72mm) for about $9.43mm in cash (100%) or about 1.73x tangible book adjusted
for certain transaction costs or about 1.56x tangible using 12/31/2016
financials. In New Jersey Sussex Bank ($848mm) will acquire Community Bank of
Bergen County ($341mm, NJ) for about $45.4mm in stock (100%). And in Washington
Anchor Bancorp has agreed to be acquired by Washington Federal, Inc.
And 95% of respondents to the ABA's 24th annual Real Estate Lending Survey described regulation
as having a negative impact on business production and consumer credit
availability. 91 percent of the typical bank's mortgage loans made last
year were qualified mortgages. This finding indicates a sharp decline in the
extension of non-qualified mortgages, with the average percentage of non-QM
loans falling from 14 percent in 2015 to 9 percent in 2016. Banks are
restricting lending to QM segments only, and 45 percent are making non-QM loans
only to target markets or with other restrictions. According to the survey,
high debt-to-income levels in addition to insufficient documentation continue
to be the most common factors prohibiting mortgage loans from meeting QM
standards. The survey revealed that single family mortgage loans for
first-time homebuyers increased from 15 percent in 2015 to 16 percent in 2016,
a record high in the survey's history.
Wells Fargo Funding issued a reminder: Fannie Mae
and Freddie Mac (the GSEs) issued the URLA Implementation Guidance and Update
on November 1, 2016, clarifying that the redesigned Uniform Residential Loan
Application (URLA) is not yet effective and should not be used. The
communication confirmed the GSEs' new Demographic Information Addendum may be
used as of January 1, 2017, in conjunction with the current URLA dated 7/05
(revised 6/09).
Effective immediately, the following updates are being
made to M&T Banks' HARP product pages to clarify requirements when a
loan is determined to be either a HPML or a HPCT: Freddie Mac Open Access and
Fannie Mae DU Refi Plus (HARP AUS required). A loan designated to be HPML or
HPCT is limited to a maximum DTI of 45%, regardless of AUS approval. For all
HARP loan products, if a loan is determined to be HPCT, standard HPCT
requirements apply including a residual income test.
Flagstar Bank updated its tax transcript
guidelines. W-2 or 1099 transcripts are no longer required for wage-earner
borrowers, non-employed borrowers (e.g., fixed income documented with an award
letter) and commission income less than 25%, with the exception of handwritten
income documents and underwriter discretion based on any red flags present in
the file 1040 Tax transcripts will be required for the following income types:
Self-Employed, Commission greater than 25%, Rental Income documented on
Schedule E, Employed by family and Fixed income types such as disability,
social security, retirement, child support, alimony, etc., when the 1040's are
obtained in lieu of alternative documentation e.g., award letter, 1099, bank
statements, etc. effective for table funded transactions registered on or after
Thursday, April 6, 2017 and correspondent transactions delivered on or after
Thursday, April 6, 2017.
Trainings and Events:
Who doesn't want to spend time in Hawai'i? The Mortgage
Bankers Association of Hawai'i annual conference is a couple of months away
on June 28th - 30th at the Hawaii Prince Hotel Waikiki. Register today to attend this conference with a fabulous
line up of industry speakers and awesome networking opportunities. Don't
miss your opportunity to attend this incredible event!
Looking for ways to improve your loan origination skills?
Look no further. Essent's training department would like to help you
prepare for a successful home financing season. Go here to check out the many course options available to you
in April through Essentials training.
Don't miss California MBA's April 27th Mortgage
Quality & Compliance Committee (MQAC) webinar on Digital Compliance featuring John
Haring, Director of Compliance Enablement with Ellie Mae!
Join the Cato Summit on Financial Regulation, June 6, 2017 in
Charlotte, NC. This years' distinguished group of speakers will
explore bank regulation, innovation, and the path forward.
Risk assessments are the
backbone of any well-built Anti-Money Laundering and Office of Foreign Assets
Control compliance program. An efficient and effective program cannot be
developed without knowing where one's risks reside. Register for the April 14th "AML
OFAC Risk Assessment Cornerstone of An Effective Compliance Shop" live
webinar.
Join Michigan Mortgage Lenders Association's on May 2nd
to celebrate its Rising Stars. The Rising Star Award recognizes MMLA
members, new to the industry, who have excelled in their profession. The
award recipients were chosen because of their work accomplishments and their
dedication to the mortgage industry and were nominated by their peers. The
reception will take from 6 p.m. - 9 p.m. at Motor City Casino's Amnesia Night
club.
Capital Markets
According to Cbonds, Fannie Mae has raised $2 billion
through a public offering of bonds. The bonds will carry a coupon of 1.875% and
will mature on April 5, 2022. JP Morgan, Nomura International plc and TD
Securities acted as book-runners for the offering.
This morning we saw the weekly initial Jobless Claims
number. The economy is driven by jobs and housing, and despite last Friday's
poor March nonfarm payrolls (rising just 98,000), the labor market is
tightening. The unemployment rate hit 4.5%, its lowest level since 2007. The
labor force participation rate held steady and the employment-to-population
ratio rose for the third straight month. The situation makes one wonder, does
everyone want a job: STRATMOR Group web site?
Looking at the bond market, we continue to see rates slightly
drop during this Spring Break Week. (Don't forget the bond market is closing
early today, and is closed tomorrow, so anyone setting rates will err on the
conservative side.) The headlines were grabbed by President Trump's comments
in an interview with the Wall Street Journal talking down both interest rates
and the US dollar, with the 10-year yield hitting a low of 2.26%. And of
course, the NY Fed continues to buy $1-2 billion a day of agency MBS using
money from early payoffs.
Our bond markets are only partially influenced by U.S.
economics. North Korean tensions remain very much in place ahead of a potential
nuclear test this weekend and in this country the focus for today will be on
bank earnings. Market participants may be watching the forthcoming French
election with anxiety over what it might mean for the euro, but Italy's
accumulating problems could have much more serious consequences.
Looking at the numbers, yesterday the 10-year closed
unchanged (as did MBS prices) yielding 2.30%. This morning we've had weekly
jobless claims (-1k to 234k) and the Producer Price Index (-.1%, core flat).
Coming up is the University of Michigan Sentiment Index, along with an early
close. In the early going we find rates mixed versus last night: the 10-year
is yielding 2.25% and agency MBS prices are worse a shade.
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