(Thanks to Byron D. for this one.)
A young couple gets married and at the end
of the day, the new groom carries his bride across the threshold and proceeds
to place her on the bed.
As they start getting undressed, he
laughingly throws his pants at her and says, "Here dear, put on my
pants."
She has a look of confusion but does as he
wishes.
After putting them on she notices just how
big they are compared to herself and then observes, "These pants are too
big for me."
He responds, "That's right, and don't
forget who wears the pants in this home."
She thinks for a second and then flips her
panties at him, saying, "Here honey, put my panties on."
He chuckles and then tries to put them on
but he can't get them past his knees.
He says, "Well, I tried dear, but I
can't get into your pants."
She replies, "That's right, and you
won't until your damn attitude changes!"
Overheard yesterday here at the National Secondary Conference:
"She is not the brightest crayon in the box." Funny. But there are
plenty of "bright crayons" working on IT. The global market for
blockchain technology is expected to grow to $5.43 billion by 2023, up from $228 million in
2016, according to an Allied Market Research report. "Blockchain-based
solutions are projected to be adopted earlier in some industries such as
financial services and the supply chain industry as compared to many other
industries," the report notes. It is expected to become mainstream. But
there is a risk with being "too mainstream": your financial fortunes
rise and fall with the general industry. Just look at Ellie Mae, whose fortunes are tied to the overall lending
climate.
Products for brokers and LOs
I am often asked to predict if technology will replace
loan officers. The reality is technology should be helping humans, not making
them more anxious and inefficient. Sure, people make mistakes (they're humans
after all), but only people can add value through expertise, knowledge and
advice that would be difficult to replace with technology. Maxwell recently
published a great piece, "The Secret to Winning in the Mortgage Business," on
how technology can be used to create a world of technology-assisted humans --
empowering loan officers to do what they do best and ultimately win in the
mortgage business. This world where technology and loan officers co-exist and
thrive shines a bright light on the future of the mortgage industry for both
borrowers and lenders. Download the piece for the story of one originator's secret
sauce.
In wholesale news, Cardinal Financial has announced the launch of its new wholesale channel led by
industry vet Amy Mahar. "We saw the way most lenders do business
and thought, there's got to be a better way. Cardinal Financial has
spent years and millions of dollars developing proprietary technology called
Octane that completely transforms the manufacturing process and user
experience. Mortgage brokers desire a consistently reliable partner who can
offer modern solutions and evolve with their changing needs and those of the
borrower. The power of Octane is enhanced by human expertise and a 'We can do
that!' culture. It's our job to make our brokers look good and our dynamic,
automated approach to workflow is a game changer!" Cardinal is actively
recruiting visionary AEs and Sales Leadership who are Influencers in their
markets and want to be part of transforming the future of wholesale. Email Amy Mahar
or call (704) 413-6956.
And brokers should know that Carrington has extended its Spring Streamline
Special with reduced LLPAs on FICO < 600 on government Streamlines (FHA and
VA IRRRLS), available for all loans locked through May 31st. These
promotions and recent guideline changes are just a few of the changes made
recently in their ongoing effort to become easier to use and with a commitment
to their 'under-served' strategy! Visit CarringtonWholesale for a current rate sheet or to become a
broker call 866.453.2400.
Mortgage insurance
No mortgage insurance company wants to see their name in
the headlines, especially when it is combined with "whistle blower." But such is Radian's fate.
Speaking of Radian, its new mortgage insurance written
jumped 25% in the first quarter 2017, helping drive a strong start to the year.
According to its first-quarter earnings release, new mortgage insurance written
hit $10.1 billion for the quarter, compared to $13.9 billion in the fourth
quarter of 2016 and $8.1 billion in the prior-year quarter. "Radian Group
Inc. (NYSE: RDN) today reported net income for the quarter ended March 31,
2017, of $76.5 million, or $0.34 per diluted share. This compares to net income
for the quarter ended March 31, 2016, of $66.2 million, or $0.29 per diluted share.
Consolidated pretax income for the quarter ended March 31, 2017, was $114.7
million, which compares to consolidated pretax income of $102.4 million for the
quarter ended March 31, 2016."
Unfortunately, the numbers missed estimates. Compass
Point writes, "We reiterate our NEUTRAL rating on RDN and lower our
price target from $20 to $19 (10x FY18 EPS). Our updated FY17 and FY18 EPS
estimates are $1.72 and $1.90 (vs. $1.84 and $2.01 previously). We expect new
insurance written (NIW) will be down slightly in FY17, while insurance in force
will increase almost +9%. Given the current valuation (~9.0x FY18 EPS and ~1.4x
P/TBV), along with continued revenue headwinds if refi activity remains muted,
we don't see a major catalyst to drive RDN higher. Potential positive catalysts
for earnings include: better-than-expected credit performance, acceleration of
growth in the Mortgage and Real Estate Services segment, a more aggressive
stance on share repurchase, or expansion of front-end risk transfer programs. The
biggest uncertainty over the next two years will be the status and scope of any
potential GSE reform.
"While the entire MI group sold off following the RDN
miss, it seems unlikely that the industry-wide decline in refinance volumes
would impact earned premiums at other companies to the same magnitude as Radian.
Based on our analysis of the different mortgage insurers' single premium refund
schedules, the lower than expected earned premium that drove a large portion of
RDN's earnings miss yesterday looks like a RDN specific issue. RDN appears to
have a more aggressive single premium policy cancellation refund schedule than
the other MI's we examined."
After the Radian news KBW put out, "...we revisited
earnings for peers that have not yet reported. We are reducing our estimate for
1Q17 earnings to $0.12 from $0.14 to incorporate a lower average premium
margin. We calculate that NMIH's average premium was 41.7 bp last quarter.
Management has guided to a longer-term average premium in the mid-40 bp since that's
where the company is putting on new business (net of reinsurance). We had been
assuming a modest increase in the premium margin reflecting this trend but we
now assume a roughly flat premium margin in 1Q relative to 4Q. We believe our
longer term premium margin assumptions for NMIH (43.7 bp in 2018) remain
reasonable."
USMI published a Q&A between USMI President and Executive
Director Lindsey Johnson and USMI Chairman and Mortgage Guaranty Insurance
Corp. (MGIC) CEO Patrick Sinks. In their discussion, Johnson and Sinks discuss the
past, present, and future of the MI industry, and how MI has helped people
affordably become homeowners for 60 years.
What about non-private mortgage insurance? FHA
published Mortgagee Letter 2017-10, Additional Period of
Eligibility for 203(h) Mortgage Insurance for Disaster Victims of Specific
Presidentially-Declared Major Disaster Areas (PDMDA) in Louisiana, which
announces an extension in the period of eligibility for Section 203(h)
mortgages for victims of the March 31, 2016, and August 14, 2016,
Presidentially-Declared Major Disaster Areas in Louisiana. The period of
eligibility for this program allows the FHA case number to be assigned within
one year of the date the PDMDA is declared, unless an additional period of
eligibility is provided. To allow for the long-term recovery of Louisiana
disaster victims, the eligibility period is being extended to no later than
September 8, 2017. This guidance is effective immediately.
Capital markets
Anyone looking for exciting, thrilling news out of the NY
MBA Secondary conference will be somewhat disappointed. Talk from the
30,000-foot level is still, as it has been for years, focused on GSE reform,
the role of the FHFA, the solvency of the FHA, updates on the common
securitization platform, and the like. At the 5,000-foot level there is a
little more going on as capital markets folks look for a few basis points here
and there, and talking about mortgage servicing rights trends, a few new
investors, the possibility of a Caliber IPO, and such.
And anyone looking for interest rate volatility is sorely
disappointed out there. It's been "steady as she goes" which is fine
for lenders, since volatility doesn't help bottom lines. But Monday
fixed-income securities, like Treasuries and MBS, marked new highs in the wake
of below-consensus Personal Income, Personal Spending, Core PCE Prices, March
Construction Spending, and the April ISM Index. And you can throw into the mix
comments from Treasury Secretary Steve Mnuchin who said that GDP growth could
accelerate to 3.0%, but it would take up to two years to reach that level with
help from tax cuts and reduced regulations.
One would have thought rates should have improved, given
the mediocre economic news, but once again we were reminded that being a day
trader would be tough even if you knew the news in advance. Rates surprisingly
moved slightly higher by the end of the day with the 10-year moving up to 2.33%
and 5-year T-notes and agency MBS prices worsening about .125.
And there isn't much scheduled to move rates today, with
just a couple minor numbers (Redbook Same-Store Sales Index, the ISM New York
Business Conditions Index, and April auto & truck sales). Perhaps of more
interest, although no change to interest rates is forecast for tomorrow, day
one of the FOMC two-day meeting will commence. We start the day with rates
slightly higher than last night: the 10-year is yielding 2.33% and agency MBS
prices are worse about .125.
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