Changes to Freddie and Fannie Coming Up?

By rchrisman@robchrisman.com

 

Here is part 3 (of 3) of some very subtle humor about, "Can one boil down questions in Q&A sessions to certain categories?" about folks asking questions after speeches.

14. "Thanks so much for your presentation. My own work, I believe, refutes everything you've ever done; I'd like to offer you a presentation of my own in the eighteen minutes we have left."

15. "I noticed there are some things you haven't done in your career. Can you explain why you haven't done them, even though I consider them to be more important than the things you personally prefer to do?"

16. "I did something six years ago, and some people criticized what I did. Please allow me to explain why they were wrong to disagree with me, in detail, and then tell me that you agree with me."

17. "I drifted in and out during the middle of whatever it was you were talking about. Could you please revisit that entire topic? I will not be more specific, thank you for your time."

18. "Uh, yeah...uh, I was wondering...do you, uh, what's your policy on, uh...lunch?"

19. "Someone else already asked my question. Make them give it back."

 

Think every LO or banker's Facebook page is immune from company discipline? Think again. (Warning: contains very harsh, abrasive, and alarming profanity.)

On Wednesday, June 15^th at 1:00 PM EST, learn everything you need to know about LO Compensation, MSAs, and RESPA in a free webinar presented by XINNIX, The Mortgage Academy. The webinar will feature the mortgage regulation expert, Mitch Kider, Managing Partner of Weiner Brodsky Kider PC. This live webinar is complimentary, but registration is required. Click here to learn more and register.

 Alight and the California MBA are inviting CFOs and senior finance executives to a networking event at the Ritz Carlton Laguna Niguel in Dana Point on June 23rd. This event kicks off the newly-formed CFO & Senior Finance Working Group that Alight and the California MBA collaborated on to elevate CFOs and their teams. Participants in this invitation-only group will share best practices, collaborate to find solutions for shared problems and challenges, and provide a unique and confidential sounding board for fellow members. This purpose-driven, content-rich working group is the first of its kind and will work to significantly raise awareness of the absolute criticality of CFOs and their teams in the successful, forward-thinking mortgage banking firm. To get your personal invitation to the event at the Ritz, contact Sandee McCready (415.813.1842).

 The California MBA is presenting a webinar on...appropriately, earthquakes. The webinar, set for June 9, was developed under a collaboration between Blackstone Consulting LLC and AEI Consultants.

 The New Mexico Mortgage Lenders Association's June 9th Luncheon is still available for registration.

 Plaza Home Mortgage is offering a free webinar on Monday, June 13^th in which you will be able to watch the tactical and information-rich webinar for how to effectively source, train, and assimilate Millennials into your business, so you can also begin to freshen up your sales team. (Interested in more Plaza webinars? Click here to view its June Calendar.)

 Registration is now open for The Mortgage Collaborative's Summer Lender Member Conference, which will take place August 21-23 at the Four Seasons Hotel & Resort in Denver, CO.  The conference will feature a powerful agenda filled with presentations from top industry leaders, relevant educational breakout tracks, and a series of peer-to peer networking sessions and events.  For more information, contact Rich Swerbinsky.

 Turning to the nitty-gritty of lending, and news regarding Fannie Mae & Freddie Mac...

 In reviewing Fannie MORA and Freddie CORE reviews it's clear that seller/servicers continue to struggle with establishing and implementing an internal audit program. Mortgage Quality Management and Research, LLC (MQMR) works with lenders to complete three key components: 1. Initial risk assessment of the seller/servicer's organization as a whole, 2. An internal audit charter (policy and procedure and acceptance by the Board of Directors), and 3. Minimum 12-month calendar for performing ongoing audits of various departments, functions, and processes. Implementing these three activities is difficult to manage internally without having to hire a cadre of individuals with broad and deep subject matter expertise in areas such as compliance, originations, operations, quality control, vendor management, servicing, IT, HR, and many more.  MQMR's internal audit division has been assisting seller/servicers in meeting their internal audit requirements whether fully outsourced, or supplementing the existing program that is in place. For more information on internal audit programs contact Britt Haven (818-940-1200 x104). MQMR will be attending the upcoming ABA Regulatory Compliance Conference in San Diego and the Mortgage Bankers Association of Florida Conference in Delray Beach, FL if you'd like to meet in person.

 Isaac Boltansky with Compass Point Research & Trading reports, "There have been three notable GSE shareholder developments recently. On May 31 a number of trade and consumer groups sent a letter [see a few paragraphs down] to FHFA Director Mel Watt stating that they are 'deeply concerned' by the ongoing reduction in the GSE capital buffers mandated by the Third Preferred Stock Purchase Agreement (PSPA). The letter - which was signed by a group including CMLA, CRL, and NAACP - calls on Director Watt to 'suspend GSE dividend payments to Treasury, and require the GSEs to develop and implement capital restoration plans so they have enough capital to safely manage their business and to support America's housing finance system.'

 "Second, on June 1 a group of 32 House Democrats sent a letter to FHFA Director Watt and Treasury Secretary Lew expressing their 'concern' with the capital buffer reduction at the heart of the Third PSPA and urges a reassessment of the arrangement. Although we do not believe administrative action altering the Third PSPA is imminent, these letters support our view that the policy conversation in D.C. is steadily moving toward a consideration of GSE capital retention.

 "Third, on June 2 a multidistrict litigation panel denied the U.S. government's request to consolidate four GSE shareholder cases in a D.C. federal court. We view this development as a procedural positive for GSE shareholders as it lessens the downside risk of the upcoming Court of Appeals decision by preserving numerous alternative legal avenues and prevents the worrisome potential of Judge Lamberth hearing a consolidated set of cases. A decision in the Court of Appeals case is expected by August."

 So yes, a joint letter from a collection of trade associations, such as the CMLA and CHLA, representing small lenders and affordable lending advocacy groups to FHFA Director Mel Watt. The letter urged Director Watt to order a suspension of the dividends that Fannie and Freddie are paying on the senior preferred stock held by the U.S. Treasury in order to permit the GSEs to rebuild their capital. "Our organizations are deeply concerned that under the Preferred Stock Purchase Agreements with the Treasury Department, the capital buffers of Fannie Mae and Freddie Mac will be completely eliminated by the end of 2017. This course of action is likely to destabilize the housing economy, undermine efforts to make housing finance more accessible and affordable, and drive up the costs of homeownership... Accordingly, we urge you to suspend GSE dividend payments to Treasury, and require the GSEs to develop and implement capital restoration plans so they have enough capital to safely manage their business and to support America's housing finance system."

 Fannie Mae announced plans to release historical data in July on a portion of the company's loans modified due to delinquency (700,000 loans modified between 2010 and 2015). This data release provides the market with greater ability to analyze the performance of modified loans in support of the previously announced re-performing loans securitization program. "The market for Agency RPL securities is relatively new, and we are providing this information so that the industry can get an in-depth view of the underlying loan performance," said Bob Ives, Head of Retained Portfolio Asset Management, Fannie Mae. "This historical data release should allow for a greater understanding of these loans and enable better modeling which in turn should foster greater liquidity for these securities."

 And Fannie recentlyannounced a new business-to-business integration platform. This platform enables a standardized connection to Fannie Mae's technology applications, offering direct integrators and technology solution providers a simple, efficient, and reliable integration. The first service available on the platform will enable direct integration for submitting the Uniform Closing Dataset (UCD). A new UCD collection service will also launch in September 2016 to collect UCD files through a web-based user interface, providing a simple and streamlined delivery experience.

 With all this going on, who needs rate volatility? Fortunately, after Friday's employment data fireworks, effectively removing a Fed rate increase this month from the table, it has been quiet. In fact, Tuesday, aside from a little intra-coupon and intra-security shifting, not much happened - although the price of oil is sliding higher. So I won't waste your time. At the close, the 10-year note was about .125 in price better (yield 1.71%) and agency MBS prices were a shade better.

 Today we've already had last week's mortgage application stats from the MBA (up over 9% with refis +7% and purchase apps +12%). Ahead of us is the JOLTS April job opening numbers, and then a $20 billion 10-year note auction. Do you feel like tying up your money for 10 years and earning 1.71% the whole time? This morning the 10-year is at 1.72% with agency MBS prices nearly unchanged.

Banks and Mortgage Banks Buying Other Banks and Mortgage Banks

By rchrisman@robchrisman.com

 

Here is part 2 (of 3) of some very subtle humor about, "Can one boil down questions in Q&A sessions to certain categories?" about folks asking questions after speeches.

8. "Hi, I'd like to complain about as many things as possible before the moderator realizes I'm not building up to a question of any kind and cuts me off."

9. "I'm deeply unpleasant, and have run out of friends and family members who are willing to put up with my opinions."

10. "I used to like your work, but I don't now. Have you considered doing the things I like again?"

11. "Hi, I have a personal anecdote that I believe completely disproves the central thesis of your research."

12. "This is more of an observation than a question - in fact it's not a question at all - in fact it's less an observation than an open-ended series of unconnected thoughts wrapped in a thin veneer of criticism - I've never asked a question in my life."

13. "I have read a great many books. Please acknowledge how many books I have read. I will not stop listing them until you acknowledge it."

 

Welcome to a day of primary elections in New Jersey, Montana, New Mexico, South & North Dakota...and California. As one pundit pointed out, "The problem we have is that 47% of Americans, who pay ZERO federal income tax, voting on what to charge everyone else." Is change imminent in the political landscape? We'll see, but things are certainly changing in the lending company, products, & personnel landscape.

Under the "new products" banner, "Many originators & brokers come across borrowers that are fine credit risks but don't fit many company's guidelines. Greenbox Loans was founded based on the concept of 'out of the box' underwriting of residential loans. Raymond Eshaghian, President of Greenbox Loans believes that the "The residential lending environment has been plagued by regulatory challenges limiting credit to well qualified borrowers that do not fit in the box. We think outside the box with a common sense approach in helping qualified borrowers obtain the financing they need. Greenbox's proprietary programs and guidelines include 24 Months Bank Statement loans with 580+ FICO score - up to $2MM loan amounts, no income investor loans (borrowers qualify based on rental income up to 75% LTV), no income investor loans for Foreign National borrowers up to 70% LTV, Non-Prime loans up to $2MM with 500+ FICO score, Non-Prime loans for borrowers with recent short sale/foreclosure/BK discharge, and non-warrantable condo programs. For more information on programs or on becoming an approved broker, contact Greenbox Loans at (800) 919-1086; email wholesaleinfo@greenboxloans.com for additional program information.

We know many originators are having their best years, but want to invest the same amount of time (or less) and produce more. NMP U (National Mortgage Professional Magazine's professional development division) is hosting a webinar entitled How to Instantly Multiply Your Production and Referrals on Thursday, June 9 at 2PM EDT.  Generating consistent predictable growth in production is what most MLOs strive for. Click here to join Ron Vaimberg, Executive Director / Head Coach of NMP U as he shows you the secrets to increasing your originations no matter what is going on in the market.

 Next week PCBB (Pacific Coast Bankers Bank) is offering a free webinar for banks titled, "Fixed Rate Loans for Customers & A Floating Rate for You." "You can offer your business customers a long term fixed rate loan but keep a floating rate for your bank. Manage interest rate risk without hedge accounting issues. Sign up for a free webinar to learn more about the program and how it can benefit your bank: www.pcbb.com/company/events.

 The Dallas Mortgage Leadership Roundtable will bring together "prominent housing industry experts on June 16, 2016 to discuss the direction of the mortgage industry. The event is being hosted by National Mortgage Insurance Corporation (National MI), a California-based private mortgage insurer, and ISGN, a leading provider of award-winning technology solutions to the mortgage industry." Contact Tracy Berry.

 Maybe it's the time around the Memorial Day Holiday week, but announced bank mergers & acquisitions have quieted down a little. S&P Global Market Intelligence reports that through May 15, there have been almost 8% fewer bank M&A deal announcements vs. the same point last year (95 vs. 103).

 In mortgage banking, "The summer is hot and strong for many small to mid-tier mortgage banks ($250M-$1.5B per year), but again, the winter is around the corner, and many mortgage banks should expect pipelines to reduce by 40-50% - unless of course, they have the capital to continue their sales and marketing push to acquire new branches", says Dr. Rick Roque, (413.297.6895). "With the cost of marketing and compliance leaving many companies in this segment to look for capital partners or plainly to be acquired in order to better position them for growth while minimizing their risk. This will continue to motivate the M&A activity through 2017, and the high production volume today, will help inflate the purchase multiples for companies willing to explore being acquired by the right capital partner. 

A leading Mergers & Acquisitions (M&A) firm is seeking mortgage banks in the Midwest or Mid-Atlantic markets to be purchased either by selling their stock or assets. Applicable mortgage companies would have closed between $300M-$1.2B in 2015, or on pace to doing so in 2016, either consumer direct or referral partner (Realtor) based originations. No Agency approvals are necessary since they are already in place. If you would like to have your firm acquired, possibly receive a 2-4x after tax multiple, maintain your leadership and control, but rapidly accelerate your growth with significant access to capital, a broad array of new / innovative and non QM products, please contact me for a confidential discussion - principals and agents are encouraged to respond. (Please specify opportunity.)

 Coming back to banks, S&P reports the median price-to-tangible book ratio this year has been 130.20% vs. 136.11% as of the same point last year (about a 4% decline). In the last week or so the only news has been that three-bank holding company QCR Holdings ($2.6B, IL) will acquire Community State Bank ($595mm, IA) for $80mm in cash or about 1.24x tangible book. mBank ($729mm, MI) will acquire The First National Bank of Niagara ($68mm, WI) for about $7.3 million in cash. RCB Bank ($2.5B, OK) will acquire Cornerbank ($271mm, KS).

 And there are plenty of developments in the residential lending arena.

 Nashville-based FirstBank's FirstBank Mortgage has completed the asset acquisition of Finance of America Mortgage's Correspondent Division (Formerly PMAC Correspondent Lending). The new venture will be known as FirstBank Correspondent Lending. "We are honored and eager to welcome the Correspondent Lending group to FirstBank Mortgage," said Wib Evans, President of FirstBank Ventures. "We look forward to having Bill Scammell and his seasoned mortgage specialists on our team!" As part of the acquisition, FirstBank Correspondent Lending will proudly utilize the innovative loan delivery software, Fusion.

 California's Guild Mortgage Co., an independent mortgage banking company, has announced its agreement to acquire Tenura Holding's AmeriPro Home Loans based in Austin, Texas. "The new acquisition will add $750 million in loan volume and is expected to close July 1, making Guild one of the largest companies in Texas. From 2010 to 2015, Guild grew from its western base into the Southeast and Southwest, increasing its number of branches and satellites from 75 to more than 230. AmeriPro has 29 branches in states such as Oklahoma, Florida, Colorado, California and Utah. Guild is no slouch, providing jumbo home loans through its relationship with Mutual of Omaha Bank and currently servicing over $22 billion.

 And Guild is hiring. "As Guild Mortgage Company continues the march to establish themselves as the leading privately-held mortgage company in the nation, expansion continues in its Texas Region which includes Texas, Oklahoma, Arkansas, and Louisiana. Founded in 1960, Guild Mortgage is licensed in 37 states. If you are a branch manager or loan officer, looking to align with a direct seller/servicer in one of these states, please contact Jed Rudd, District Manager (682.498.8990).

 In other personnel news, Pennsylvania's GMH Mortgage Services, LLC, announced the appointment of Joseph Nattans, Jr. as President effective June 1. Nattans recently served as GMH Mortgage's Senior Vice President of National Retail Sales and has been with the company since 2010.

 Shifting gears to interest rates, yesterday the bond market gave back some of its Friday improvement. Regardless, we're still in the range we've been in for most of 2016. We began the day slightly worse, but most of the bond market's movement was due to Fed Chair Yellen's downplaying the significance of the May jobs report...but did not do so forcefully enough to convince traders that the June 15th rate decision could potentially hold the second hike in this cycle. She was upbeat on the economic outlook while noting that "uncertainties are sizeable."

 On everyone's radar screens is the June 23 Brexit referendum (British exit) should also keep those expectations at bay and move the market's focus to the July meeting. There is also insufficient U.S. economic data out over the next eight days to give the Fed confidence to tighten policy - or do anything for that matter.

 Speaking of economic data, today we've had the Q1 Productivity and Unit Labor Costs (-.6% as expected, +4.5, respectively) - not generally market-movers - and later is a $24 billion 3-year Treasury auction. Yesterday, by the time the MBS traders hit the subways, the 10-year note closed down/worse nearly .250 in price, yielding 1.72% but MBS prices were only worse a smidge. This morning the 10-year is unchanged at 1.72% and agency MBS prices are better a smidge.

Arizona Attorney Pleads Guilty to Mortgage Fraud

By rchrisman@robchrisman.com

 

Here is part 1 (of 3) of some very subtle humor about, "Can one boil down questions in Q&A sessions to certain categories?" about folks asking questions after speeches.

1. "I'd like you to know that I'm particularly smart. Here are some subjects I consider myself to be very smart about. There is no question."

2. "Can you explain why I didn't understand this presentation?"

3. "This question has two parts, neither of which have anything to do with the other or the subject at hand. Also, this question has four parts."

4. "Can you possibly speak to an area that is outside of your expertise but is secretly in mine, so that when you can't answer it, I can try to hang onto the microphone and answer it for you?"

5. "I've written a book. Why hasn't anyone published it? I will not tell you what this book is about. I have already tried all of the suggestions you are about to offer me, so don't even try it."

6. "I have some opinions about other ethnic groups that I would like to take this opportunity to share."

7. "Why aren't I very, very, very, very, very, very, very, very famous and successful?"

 

Uh oh: New York state's financial regulator sent a letter to 28 fin tech companies seeking information about their online lending activities. But in these days of these days of online leads, Quicken Loans' Rocket Mortgage, Guaranteed Rate's Intuitive Loan Finder, reliance on technology, etc., is there a clear definition of "fin tech?" Or is it one of those, "I know it when I see it" things? (I don't think I'll find the answer to that in the WWII Museum here in New Orleans where I am today on the anniversary of D-Day.)

Continuing the bank theme, the U.S. Securities and Exchange Commission is investigating Germany's Deutsche Bank and whether it delayed recognizing losses, or at least a hit to revenue, over several years by mispricing mortgage bonds. Reuters reports it is no small matter: DB may have masked up to $1.5 billion of false profit. On top of that, Deutsche's own risk managers warned of a problem, to little avail.

Deutsche Bank began acquiring a large position in these bonds backed by Fannie & Freddie, per Bloomberg. In late 2008. Deutsche's traders amassed some $30 billion of securities within a few months on a simple bet: the mortgage bonds were paying at least 6 percent in interest, while the bank's funding costs were declining thanks to a mix of rate cuts and government support. "The traders reckoned they could make about $1.2 billion a year just by sitting on the position.

 "That, though, was based on assuming the bonds were worth at least 108 cents on the dollar...Deutsche's own risk officials, however, pegged the price at just 103 cents on the dollar after factoring in the likelihood of defaults and mortgage refinancing. Executives from market risk management in 2009 ordered a valuation analysis - but other colleagues pushed back against their findings...The 5-cent price difference allowed the traders to book an extra $1.5 billion of gains, which later had to be booked as a loss as they gradually wound down the position over the next four years."

 In other legal affairs, the Federal Deposit Insurance Corporation (FDIC) as receiver for five failed banks announced a $190 million settlement of certain residential mortgage-backed securities (RMBS) claims with Barclays Capital Inc.; BNP Paribas Securities Corporation; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc.; Edward D. Jones & Co., L.P.; Goldman, Sachs & Co; RBS Securities Inc.; and UBS Securities LLC.

 The settlement resolves federal and state securities law claims based on misrepresentations in the offering documents for 21 Countrywide RMBS purchased by the five failed banks. The FDIC as receiver for failed financial institutions may sue professionals and entities whose conduct resulted in losses to those institutions in order to maximize recoveries. From November 2011 through August 2012, the FDIC as receiver for the five failed banks filed six lawsuits for violations of federal and state securities laws in connection with the sale of the 21 RMBS to the failed banks. The FDIC has filed a total of 19 RMBS lawsuits on behalf of eight failed institutions seeking damages for violations of federal and state securities laws.

 ThomsonReuters reports that the settlement funds will be distributed among five failed bank receiverships: Colonial Bank of Montgomery, Alabama, which failed on August 14, 2009; Franklin Bank, S.S.B. of Houston, Texas, which failed on November 7, 2008; Guaranty Bank of Austin, Texas, which failed on August 21, 2009; Security Savings Bank of Henderson, Nevada, which failed on February 27, 2009; and Strategic Capital Bank of Champaign, Illinois, which failed on May 22, 2009.

 Yes, the big names are still out there making news in legal affairs. Remember that The United States Court of Appeals for the Second Circuit in the matter of United States ex rel. Edward O'Donnell v. Countrywide Home Loans, Inc., et al., Docket Nos. 15-496, 15-499, recently overruled a $1.27 billion jury award against Bank of America in a case involving the Financial Institutions Reform, Recovery, and enforcement Act of 1989 ("FIRREA") for mail or wire fraud affecting a federally insured financial institution.

 The Government's claims were based upon allegations that Countrywide knowingly sold poor-quality mortgages to government sponsored entities ("GSE's") such as Fannie Mae and Freddie Mac, with the intent to defraud the GSE's under the loan purchase agreements the parties had entered into. Importantly, the appeal addressed the only the issue of whether the Government had successfully proved its fraud allegations under the relevant statute. It appears the Government had chosen not to present or pursue evidence related to more basic breach of contract claims and Bank of America latched onto this point by arguing in its appeal that, at most, the evidence presented at trial demonstrated an intentional breach of contract on the part of Countrywide-i.e., that Countrywide/BOA sold mortgages that it knew were not of the quality promised in the contracts-but not that Countrywide acted fraudulently or with any intent to defraud the GSE's. Ultimately, the court of appeals held that the evidence the Government presented at trial did not, and could not, amount to the kind of fraudulent intent that is necessary to prove a scheme to defraud thro ugh contractual promises under the FIRREA.

 Northern California's American Mortgage Law Group reports that it "has now obtained settlements for three clients involved in the pending "In re: ResCap Liquidating Trust" litigation and has also been able to successfully negotiate settlements for lenders that have received pre-litigation demands from the Trust. AMLG believes it has now been able to negotiate the largest number of resolutions with ResCap both in and out of litigation. Meanwhile, AMLG is continuing to vigorously defend its clients in the pending litigation as well as negotiate with ResCap in bringing about swift and beneficial resolutions to the pre-litigation demands.

 "Outside of litigation, the ResCap Liquidating Trust continues to seek recoupment of losses from lenders by way of pre-litigation demands to lenders around the country. AMLG has been retained by several lenders who have received boilerplate demands alleging AVM breaches and undisclosed underwriting defects. Furthermore, AMLG is being vigilant for any indications that a second wave of litigation by ResCap may be coming."

 Besides the big names, there are plenty of individuals going through similar legal proceedings. For example, Arizona attorney Jeffrey Greenberg. "'He not only used his legal expertise to help co-conspirators get suspicious loans on multi-million dollar Southern California homes but also to file bogus lien releases in San Diego County. The bogus lien releases enabled the defendants to take out new loans against the same properties, by making it appear as though the former loans had been paid off. The fraud currently totals up to $33.6 million,' according to authorities."

 Occasionally someone will ask me about TARP. The Treasury Department reports there are only 16 banks remaining in the Troubled Asset Relief Program. Recall that the TARP (program) of the 707 it originally invested in or about 2.3%. The Treasury is actively negotiating with these banks to exit through restructuring but has not set a timeframe when these institutions will eventually exit TARP.

 As I travel around (today I am in New Orleans) I am often asked about negative interest rates. Although the likelihood of them happening in this country is nil, the impact of negative rates in some overseas countries is actually helping our bond market by pushing investors into US Treasuries and mortgage bonds.

 Certainly rates dropped on Friday, primarily due to the weak jobs report that reduced June rate hike odds to essentially zero, as well as lowered odds for the remaining meetings this year. As a reminder, Nonfarm Payrolls were only +38k in May versus a consensus call for +162k - the weakest headline reading since September 2010. By the end of the day the yield on the 10-year was down to 1.70%, and agency MBS prices were better by .250-.375.

 And here we are in another Monday. There is no scheduled news today but we do have a speech by Fed Chair Janet Yellen speaking on the economic outlook and monetary policy at 12:30PM EDT. Tomorrow we'll have some Nonfarm Productivity and Unit Labor Costs figures, Wednesday the 8^th are last week's mortgage application numbers and JOLTS job opening numbers, Thursday is Initial Jobless Claims, and then on Friday the 10^th is a series of University of Michigan figures. In the early going the 10-yr's yield is up to 1.72% and agency MBS prices roughly unchanged from Friday's closing prices after the big rally.

The Rise Of The Technology Vendor - Updates Abound

By rchrisman@robchrisman.com

 

GREAT TRUTHS ABOUT GROWING OLD: 

1) Growing old is mandatory; growing up is optional.

2) Forget the health food. I need all the preservatives I can get.

3) When you fall down, you wonder what else you can do while you're down there.

4) You're getting old when you get the same sensation from a rocking chair that you once got from a roller coaster.

5) It's frustrating when you know all the answers but nobody bothers to ask you the questions.

6) Time may be a great healer, but it's a lousy beautician.

7) Wisdom comes with age, but sometimes age comes alone. 

 

Last night in Texas I had dinner with Seattle AE Bryson Bede and regional manager Dennis Waller from Parkside Lending. The discussion was focused on trends in wholesale lending and the habits of top AEs, but included the fact that, party politics aside, political orientation aside, forecasts on the victor aside, we have over five more months of presidential election news dominating the press and news stories. Time flies, but... five more months! Ugh.

"M&A slowed its pace in 2016 because mortgage volume was strong Q1 (remember Q1 of 2014?) and remains steady", says Dr. Rick Roque (413.297.6895). "This year is expected to be a relatively flat year as compared to 2015, but remember, 2015 ended up higher than every analyst predicted due to the micro-boom in rates in the first quarter of 2015 driving many refinance pipelines and maintaining rates for purchase transactions. But as the summer volume transpires, M&A activity will increase substantially because the multiples are there for the right buyers and sellers."

 A leading Mergers & Acquisitions (M&A) firm is seeking mortgage banks in the Midwest or Mid-Atlantic markets to be purchased either by selling their stock or assets. Applicable mortgage companies would have closed between $300M-$1.2B in 2015, or on pace to doing so in 2016, either consumer direct or referral partner (Realtor) based originations. No Agency approvals are necessary since they are already in place. If you would like to have your firm acquired, possibly receive a 2-4x after tax multiple, maintain your leadership and control, but rapidly accelerate your growth with significant access to capital, a broad array of new / innovative and non QM products, please contact me for a confidential discussion. 

 Yesterday the commentary posted some updates on non-QM lending. According to Garth Graham of STRATMOR, the Non-QM market has been primarily served by banks putting loans in portfolio for their best bank customers. Very little Non-QM has been available for smaller banks or independent mortgage bankers, making it hard for Loan Originators to serve their market. To further understand the market's appetite for this a new set of non-QM products being offered STRATMOR is conducting a free survey. This survey is focused on a specific set of Non-QM products with higher interest rates (typically 1.5% or higher than conventional products) that are available to borrowers who can't qualify for conventional financing and lender's plans for offering is type of product, and any obstacles to successfully selling such a product in your market. There is no fee to take the survey which is open through the month of June. All participants receive summary level results and the survey should take less than 5 minutes to complete.

 There are certainly changes in mortgage-related technology tools and vendor news!

 "From loan origination to servicing, the push is now greater than ever to streamline operations to make procedures safer and easier for borrowers and lenders, without compromising compliance efforts. One of the newest advancements is the ability to gather mortgage-qualifying documents, such as W-2s, pay stubs and bank statements, on behalf of borrowers through account-linking technology." So wrote Mike Romano with start-up Lendsnap. "Lendsnap is streamlining mortgage originations, and making it easier and safer for borrowers/lenders to acquire and share qualifying documentation during a mortgage application."

 From PCLender's Lionel Urban comes, "It used to be that small and mid-sized lenders didn't have access to the same technology as larger lenders, even though their needs are largely the same in terms of streamlining operations and ensuring compliance. PCLender has stepped up to the plate with a solution that levels the playing field for small to medium lenders, or those that fund 50 to 1,000 loans a month. I've deliberately chosen to hire former mortgage bankers, who understand the impact of not meeting a sales contract deadline, missing a lock delivery or working through a repurchase agreement. PCLender focuses on small to midsized lenders, who have been under-served and may often be at a competitive disadvantage with their larger counterparts.

 Strategic Compliance Partners (SCP) is offering a new platform, ShareDiligence, designed to revolutionize the way mortgage lenders manage their relationships with third-party vendors. Developed in conjunction with Offit Kurman, a leading law firm in the Mid-Atlantic region, ShareDiligence enables users to share the results and costs of due diligence through online community-based portal. "After lenders add vendors to the site (accomplished simply by providing an email address) SCP obtains signed agreements and initiates industry-specific vendor questionnaires prepared by legal counsel. Once a vendor returns its completed questionnaire, ShareDiligence disseminates the information to lenders and vendors on the system, who agree to link to one another.

 Guaranteed Rate announced it launched The Intuitive Loan Finder to help people narrow down their loan options online in only a few clicks. "It is another example of the antiquated lending industry going digital. The Intuitive Loan Finder's online decision logic guides customers through a series of simple questions to understand their unique situation and preferences. Key inputs include the loan type (purchase or refinance), the type of structure (home or condo), the purpose of the property (residence or investment), and expected time frame to keep the property. The Intuitive Loan Finder then analyzes this data to instantly generate a list of loan options with the best matches for each customer's specific needs. Once the consumer finds the perfect loan, they can use Guaranteed Rate's Digital Mortgagesolution which allows people to get approved for a loan online in less than 30 minutes - anytime, anywhere." 

 Cloudvirga, the company behind the cloud-based intelligent Mortgage Platform (iMP), is designed to streamline the mortgage process. The platform is digitizing the mortgage industry by leveraging data and deploying an automated workflow to reduce overall cost, increase transparency, and shorten the time it takes to close a loan for both borrowers and lenders. "Cloudvirga's platform is reducing costs for lenders, increasing transparency for borrowers and shortening the time it takes to close a loan for both."

 CoreLogicannounced the integration of LoanSafe Appraisal Manager on the Ellie Mae Encompass all-in-one mortgage management solution. LoanSafe Appraisal Manager allows lenders to quickly and easily review a loan application's appraisal quality, potential risk of repurchase, valuation accuracy, market risk and more directly from Encompass.  LoanSafe Appraisal Manager provides Encompass users with risk scores using an analytic model that identifies appraisals with the highest potential risk of repurchase by rank-ordering the risk of over-valuation, early payment default, foreclosure and appraisal non-compliance.

 Lending & Banking Automation Software, also known as LBA Ware, a provider of compensation automation software for mortgage lenders, recently announced a new preferred partnership with independent mortgage lending cooperative, The Mortgage Collaborative. As a Preferred Partner, LBA Ware will provide The Mortgage Collaborative's growing list of Lender Members access to robust technology solutions that streamline system integration, eliminate dependencies on error-prone spreadsheets, and reduce repetitive manual workflow to help Lender Members achieve operational efficiency and maximize profitability.

 And don't forget that about a month ago Black Knight Financial Services (BKFS) announced that it has acquired eLynx, a lending document and data delivery company.

 OpenClose an enterprise-class, multi-channel loan origination system (LOS) provider, announced that in conjunction with Mortgage Capital Trading, Inc. (MCT) it has developed a solution that normalizes and extracts a lender's committed loan sale and purchase advice data to be uploaded directly into OpenClose's LenderAssist LOS, thus eliminating significant manual intervention.  Depending on the number of loans that have been executed, time savings can be reduced from days to minutes.

 Overture TechnologiesandATS Securedannounced the launch of the Settlement Coordinator Workstation, a platform which addresses originators' and investors' unsustainable high cost to originate and buy loans.  The solution combines the industry's leading independent automated loan underwriting system with tools to conduct compliance checks, coordinate loan settlement, distribute loan proceeds and secure loan data integrity.

 Turning to the bond markets, they've gone quiet again - fine for capital markets folks around the nation. Volatility doesn't help rate locks, pipelines, or hedging. The yield on the 10-year T-Note has been range-bound for most of 2016; yesterday it oscillated in a 5 basis point range, 1.804% to 1.856%, during the session before closing nearer the highs and aiding the tightening of the MBS basis: mortgage prices did well relatively but were still off a shade from Tuesday's close.

 Today we've already had the ECB (European Central Bank) garnering early interest with their statement (no change to rates). In this country we've had the May job cuts from Challenger at 7:30am (job cuts dropped by 50% to 30k), followed by May ADP (+173k) and weekly jobless claims (expected about unchanged, they were indeed only down 1k to 267k). The upcoming treasury supply will also be announced for next week's mini-refunding consisting of 3-year, 10-year, and 30-year instruments. We closed Wednesday with the 10-year at 1.84% and in the early going both the 10-year yield and mortgage prices are unchanged.