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Client Experience Rating Webinar

March 17,2019
by admin

When members who are Platinum subscribers choose to participate in CERP, the clients with whom they completed an MLS transaction will be given the opportunity to rate their REALTOR based on Competency, Market Knowledge, Communication and overall Experience. Clients may choose to rate their REALTOR on how well they performed in each of the four categories. This webinar will walk through the process from beginning to end, showing both the REALTOR and consumer views.

Date: March 27

Time: 10 – 11 a.m.

Location: Online

Cost: FREE

Register HERE today!

Questions? Contact 713-629-1900 ext 370 or education@har.com

Source: Houston Association of REALTORS®

LO Jobs; Warehouse Products; 1099 Comp – Brokers and MBA Weigh In

March 17,2019
by admin

I hope that I never get to the point of writing things down on my “to do” list even after I’ve done them, just so I can cross them off the list. Or enjoying combining multiple “to do” lists into a master list, although (maybe) I’m already there. Many people in our industry wish the CFPB, or someone, would add “clear up mortgage loan officer compensation issues” on their list. We don’t want borrowers steered, but is there a loophole being exploited? If a broker has a set comp plan with Wholesaler A at 1.75% and Wholesaler B at .75%, and steers less sophisticated borrowers to Wholesaler A, is that legal? Kosher? Is the CFPB looking at whether or not a broker has standardized comp across all wholesalers? Lots more below.

Lender Products and Services

As we approach home buying season, a steady stream of referrals means the difference between standing out as a top performer and being at the bottom of the pack. Real estate agents still hold the keys to the referral kingdom, but top agents may hesitate to partner with an unfamiliar lender. According to Pipeline ROI, 77% of agents only have one lender they regularly partner with, so there’s room for new relationships…as long as you understand what agents truly want in a lender. Maxwell interviewed real estate agents across the country to get their perspective on what they value in a lender. Their new eBook, “Winning Agent Business,” reveals lucrative insights from agents themselves on how to earn their trust and build a lasting partnership. An exclusive to Rob Chrisman subscribers today (and a must-read for all lending professionals), Download your complimentary copy here.

CoastalStates Bank (CSB)continues to grow its Mortgage Banker Finance Division and is happy to announce the addition of two Relationship Managers. Please welcome Relationship Managers Sue Anderson (860-402-8337)and Susan Galloway (850-768-2244) to the CSB warehouse team. Both will spearhead growth in their respective regions and have the ability to serve clients on a national basis.As a growing depository headquartered in Hilton Head Island, South Carolina, CSB has developed a warehouse offering with sound lending practices while providing mortgage bankers competitive pricing, flexible terms, with excellent customer service. To learn more about CoastalStates Bank stop by our booth at the upcoming Regional Conference of MBA’s, Atlantic City, April 9-10 or Great River MBA Conference, Memphis, April 16-18. Or contact Sue, Susan, or VP of Warehouse Lending Tim Haug (843-341-9969).

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Mortgage Loan Officer Compensation

Given the thousands of lenders, and the tens of thousands of MLOs/LOs/brokers out there, a level, transparent comp playing field is critical, as is the need to treat all borrowers fairly and compliantly. It is clear that isn’t happening. Attorney Brian Levy addressed the issue on February 16 in this commentary.

From New Jersey Brian Benjamin writes, “The MLO Compensation Rule is simply put, Anti Small Business Regulation at its height. Where else in American industry is small business income restricted while larger institutions have unrestricted compensation on the same instrument? If the CFPB refutes this theory, have the CFPB and SBA Advocacy publish the SBREFA testimony from the MLO Compensation Rule hearing and a plane language explanation of their analysis.

“The MLO Comp Rule was based upon a fabricated FRB study that was then exacerbated by a few government employees for the benefit of no one but themselves, seeking to develop an issue where none existed. As you may recall, the FRB ignored two SBA Advocacy Letters for failure to comply with the Rule writing requirements.

“Mortgage brokerage companies have been required to disclose their compensation since the early 1990s. In the NAIHP law suit the FRB even went so far as to note that YSP and SRP are the same form of compensation through different channels of the industry. Further, as I recall, the FRB had no basis for the MLO Compensation Rule and had to try to apply the Rule to the regulation on subprime lending that was completely beyond the scope in this matter.

“Originally the FRB did a study. As I recall they interviewed 9 individuals and three decided they didn’t like their experience with Mortgage Brokers. Yet many repeatedly confused the MLO (from any channel of industry) with the Mortgage Broker Company.

“Nowhere else in TILA or RESPA is the Mortgage Brokerage Company not a creditor, except in the MLO Compensation Rule. The MLO Compensation Rule has done nothing to clarify the fees borrowers pay, but more to hide the fees charged by other channels of industry while also causing the flourishing of the net branch sector to explicitly avoid the MLO Compensation Rule. The Mortgage Brokerage Company should not be viewed separately as under SAFE the Mortgage Brokerage Company is designated separately from the mortgage loan originator not as one in the same. Both pay different fees, have different reporting and licensing requirements including often showing net worth or bond requirements.

“The MLO Compensation Rule has created numerous loop holes. Net Branches have flourished to avoid the 3% Rule. Is the consumer any safer?

“Confusion abounds around this Rule. In one of your articles a few years back you quoted the CFPB as noting it was referring to a HUD Rule banning 1099 income. Yet even to this day, many in industry continue to quote that State law allows 1099 compensation and as such it is legal. I saw this argument posted on a social media site this past week. The real irony being the MLO Comp Rule I first printed out had 1099 pages. I fully blame the MLO Compensation Rule writer for the confusion. Even in industry meetings, there were times of confusion trying to explain simple scenarios.

“There is no simple answer to the issue, short of trashing the current Rule and starting fresh. Full disclosure of compensation would be nice, but as someone that has worked in the secondary market you know this is not a practical option. In my 30+ years’ experience, no one has ever asked me how much I’m making, only, ‘What’s the rate, term, and how much is it going to cost close.’ If the rate I quoted was not to their liking, they would leave.

“Frankly, in my experience the MLO Compensation Rule has had the opposite impact on the economic group it was to protect. Smaller loan amount borrowers are forced to higher rate institutions. If the new CFPB Director wants to meet with a member of industry that is actually brokering mortgage loans, I am always available as I was for Ms. Warren and Mr. Cordray.”

(From the CFPB’s perspective, “Loan originator compensation must comply with the requirements in 12 CFR 1026.36(d) and (e). Those constraints govern how compensation may be determined but not how the services of a loan originator on behalf of a creditor may be structured. One can contact HUD directly regarding the current status of the Department’s referenced 2006-30 Mortgagee letter, as the Bureau cannot speak on behalf of HUD. The CFPB is deferring to the HUD Rule regarding compensation for Mortgage Brokers and Mortgage Bankers in determining whether Loan Officers are to be paid via 1099 or W-2. One can always take a look at the FAQ from HUD, page 4, where it discusses compensation.)

Organizations are aware of the issues. Pete Mills, SVP, Residential Policy and Member Engagement at the Mortgage Bankers Association, addressed the questions raised in the first paragraph of today’s commentary. “The first, ‘Is it okay for a mortgage broker company to have different comp plans with different wholesale lenders?’ The answer is probably yes. (Obviously with anything LO Comp related, the final answer depends on the individual facts.) The second, ‘Is it okay for a broker to steer a borrower to a lender with a higher cost comp plan, the answer is most likely ‘no.’

Pete sent along a more detailed explanation from the MBA’s Managing Regulatory Counsel Justin Wiseman. “In addition to its originator compensation requirements, the LO Comp Rule includes a prohibition on steering, a practice defined as directing consumer to a loan that is not in the consumer’s best interest based on the fact that the loan originator will receive greater compensation for that loan than for other loans the originator could have offered, unless the loan is in the consumers interest.

“This is not clearly defined, so the Rule creates two safe-harbors to satisfy the steering prohibition. First, in circumstances where the originator is an employee of the creditor, the anti-steering provision is satisfied if the originator complies with the compensation requirements—i.e. the prohibition on compensation based on loan terms or proxies for loan terms. This safe harbor is not available for originators who are not employees of the creditor. For these originators, typically mortgage brokers, the Rule’s compensation requirements and its anti-steering provision must be independently satisfied.

“Fortunately, the Rule provides an optional safe harbor, which if followed, satisfies the prohibition on steering. To qualify for the anti-steering safe harbor, an originator must present the consumer with loan options from a significant number of creditors with which the originator regularly does business. The originator must have a good faith belief (the Rule includes significant detail on what constitutes a good faith belief) that the options presented are loans for which the consumer likely qualifies. Loan options must be presented for each loan type for which the consumer expresses interest. For purposes of the safe harbor, there are three loan types: a loan with an annual percentage rate that cannot increase after consummation, a loan with an annual percentage rate that may increase after consummation, and a reverse mortgage loan.

“For each loan type requested, the originator must present three specific loan options: the loan with the lowest interest rate, the loan with the lowest interest rate without certain enumerated risky features (such as prepayment penalties, negative amortization, or a balloon payment in the first seven years), and the loan with the lowest total dollar amount of discount points, origination points or origination fees (or, if two or more loans have the same total dollar amount of discount points, origination points or origination fees, the loan with the lowest interest rate that has the lowest total dollar amount of discount points, origination points or origination fees).

“The Rule allows the originator to present less than three options if the options presented satisfy the loan option criteria (e.g. a loan option is the lowest rate and the lowest rate without risky features) and the originator otherwise meets the safe harbor requirements.”


Capital Markets

Treasury rates are back down to January levels, and they are helping retail mortgage origination volumes. Rates fell on the back of disappointing economic data, namely the Empire State Manufacturing Survey falling to its lowest level since last May while the Industrial Production report for February showed the second consecutive monthly decline in manufacturing output. In international news, China specified fiscal measures that will prevent the country’s budget deficit from increasing rapidly, the Bank of Japan made no changes to its policy stance, and British Prime Minister Theresa May made the rounds to garner support for her Brexit deal that will be voted on this week in order to avoid a lengthy extension of Article 50. The French President’s office indicated that the EU would agree to a short extension that was approved by British MPs only if the British parliament votes in favor of Prime Minister May’s deal.

Turning to this week, the highlight will be the FOMC meeting tomorrow afternoon through Wednesday midday followed with the Statement and updated dot plot and the post-meeting press conference with Chair Powell. Today kicks off with the NAHB Housing Market Index for March at 9:00am ET, which is expected to increase modestly. Tomorrow brings January Factory Orders, Wednesday we receive the usual Weekly MBA Mortgage Index, Thursday sees Jobless claims, the March Philadelphia Fed Survey and February Leading Indicators. The week closes with February Existing Home Sales. We begin the week with agency MBS worse a tad and the 10-year yielding 2.60% after it closed Friday at 2.59%.

Employment

“Attention energetic Fintech sales professionals experienced in loan origination or secondary marketing! Compass Analytics is growing and so is our mortgage tech sales team. Our CompassPoint™ and CompassPPE™ solutions are driven by a team of capital markets professionals, and they support mortgage origination and secondary marketing from the initial lead through servicing. If you are ready to join a great team selling great tech solutions, click here to see a detailed job description and submit your resume.”

“Looking for a company offering continuous growth, a full-scale marketing strategy, continued training, career improvement courses? Well according to the 2018 Scotsman Guide Report,

Carrington has continued to move up the ranks as a Top 25 company to work for! We offer a complete suite of products including FHA, VA, FNMA, FHLMC and a robust menu of Non-QM programs which has further fueled our growth. Carrington is currently looking to build out the Northern CA, Pacific Northwest and Mountain region, and if you feel your sales skills and experience would be a fit with Carrington, please email Deborah Mansfield.”

Are you looking for a new kind of opportunity? Where innovation is celebrated and thinking out-of-the-box is at the heart of it all? Then it’s time to look at Motto Franchising, LLC. As the very first national franchised mortgage brokerage model, we offer something completely unique. Own your own business while taking advantage of an out-of-the-box mortgage company solution. We streamline the process of starting your own business by providing a strong wholesale lender mix, franchisee setup support, LOS training, licensing, marketing tools and more. Opportunity awaits. To learn more about this innovative model, contact our team at

mottomortgage.com/franchises (866.668.8649).

There’s a big shake-up going on in the mortgage industry. Wholesale brokers are picking up momentum, gaining market share, and simply dominating the mortgage space. Find out what it takes to make the switch from retail to independent at BeAMortgageBroker.com. We can help you take the next steps toward opening your own mortgage broker shop or help match you with an independent mortgage broker in your area. Call us for a free, confidential consultation and continued support throughout the process at 800.229.6342 or learn more at BeAMortgageBroker.com.

MBS Week Ahead: Both Sides of Market Getting Excited For The Fed

March 17,2019
by admin

This week’s economic calendar is exceptionally light, with no true top-tier reports. Even the 2nd-tier data is limited with Philly Fed on Thursday and Existing Home Sales on Friday. That leaves all the more focus on what was always destined to be this week’s main event.

Since the end of January, when bonds began making a case for a consolidation in the new, lower rate range, I’ve been harping on “mid-March” as the first real opportunity for a big break higher or lower in rates. The reasons for this were simple and twofold. First, the government shutdown cast uncertainty onto economic data at least through mid-March. Second: the Fed would be out with a scheduled policy announcement, press conference, and updated economic projections on March 20th.

While the Fed has arguably been a bit flighty since December, they’ve also done a good job of convincing the market that they’re not really sure what to do at this point, and will be leaning heavily on the incoming economic data for cues. With that in mind, this meeting could actually be a bit early to expect any comfortable conclusions from the Fed, because we haven’t really seen a lopsided economic case in this month’s data.

But the Fed has something else to talk about–something that both sides of the market (equity and debt) are very interested in. I’m talking about the announcement to phase out or completely stop the balance sheet runoff (the Fed’s policy of NOT reinvesting the money it receives on its bond portfolio. From a tradeflow standpoint, this is essentially another round of QE, because it will create 10s of billions of dollars of new purchase demand in the bond market immediately. That said, the Fed wouldn’t be printing new money–simply reinvesting the money it already has.

Both sides of the market really can’t seem to wait for confirmation that this is happening soon. Bond yields broke below their key resistance level for the year last week, and stocks are going to take a stab at the same feat this morning.

2019-3-18 open

Granted, this Fed news is far from the only market mover in play, but it’s probably the biggest. It could also be the smallest, in the event they thread the needle on market expectations. It’s anyone’s guess exactly where that needle is, but I’d look at the spectrum like this:

  • Best case for markets: Fed flips the switch now, and without a gradual phase-in
  • Strong case for markets: Fed flips switch now, but with gradual phase-in
  • Neutral case for markets: Fed announces gradual plan for near future
  • Weak case for markets: Fed says coming soon, but not sure when
  • Worst case for markets: Fed alludes toward late-2019 as the more appropriate time frame and says they’ll be watching econ data in the meantime.

If anything, I think markets are a bit too excited about what they think they’ll hear on Wednesday, but I hope I’m wrong.

Builder Confidence Holds Steady After Recovering From 2018 Lows

March 17,2019
by admin

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) held steady in March, after partially recovering from substantial loses at the end of 2018. The Index, a measure of new-home builders’ confidence in the market for newly constructed homes was unchanged at 62 on a 100-point scale. The index finished 2018 at 56, a more than three-year low, after dropping an aggregate of 12 points in November and December.

NAHB says affordability still remains a key concern for builders. The skilled worker shortage, lack of buildable lots and stiff zoning restrictions in many major metro markets are among the challenges builders face as they strive to construct homes that can sell at affordable price points.

Derived from a monthly survey that NAHB has been conducting for 30 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI component charting sales expectations in the next six months rose three points to 71, the index gauging current sales conditions increased two points to 68. The component measuring traffic of prospective buyers, which consistently lags far behind the other two metrics, fell four points to 44.

“In a healthy sign for the housing market, more builders are saying that lower price points are selling well, and this was reflected in the government’s new home sales report released last week,” said NAHB Chief Economist Robert Dietz. “Increased inventory of affordably priced homes – in markets where government policies support such construction – will enable more entry-level buyers to enter the market.”

Results for the four major regions are presented as three-month moving averages. The Northeast, where both residential construction and new home sales numbers from the Census Bureau have recently been posting double digit percentages increases, there was a five-point gain to 48. The HMI in the South was up three points to 66 and West increased two points to 69. The Midwest lost one point, declining to 51.

The EDGE: Week Of March 18, 2019

March 17,2019
by admin

The EDGE: Week Of March 11, 2019

  • Houston Home Rentals Surge in February
  • Weekly Market Movements
  • Keep It Legal and Avoid Risk
  • Seats on the Bus are Filling Up
  • Calling All Leaders

For your convenience, this presentation was saved in two different formats. Click the icons to download in .pdf (Acrobat) or .ppt (PowerPoint)

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Source: Houston Association of REALTORS®

Rates Stay Low; Bigger Risks/Rewards Next Week

March 15,2019
by admin

Mortgage ratesremained at recent lows today, as underlying bond markets strengthened. For US Treasuries, this brought rates to new multi-month lows. Mortgage-backed bonds, on the other hand, simply returned in line with the best levels of the week. That allowed mortgage lenders to continue offering the best rates of the week (also the best rates in more than year!).

For most of 2019, rates have remained locked in a narrow range. The past few days have done more than any others to challenge that range, but it will likely take friendly words from the Fed next Wednesday to fuel any further improvement.

With that in mind, I’d say that much of the recent strength in rates is based on hopes for friendly central bank policies. There’s always a risk that the Fed isn’t quite ready to say what markets are hoping they’ll say. If that’s the case, we could see rates retreat back into the previous range. Either way, next week presents a bigger risk/reward scenario in terms of how far rates could move.


Loan Originator Perspective

Bonds gained ground again today, as rates continued near 14 month lows. Treasuries have profited more than MBS in our recent rally, you’d hope the two will equalize soon. At any rate, I’m only locking loans within 30 days of closing, for risk averse borrowers. Looks like the trend may be our friend for now. –Ted Rood, Senior Originator


Today’s Most Prevalent Rates

  • 30YR FIXED – 4.375%
  • FHA/VA – 4.0-4.125%
  • 15 YEAR FIXED – 4.0 – 4.125%
  • 5 YEAR ARMS – 4.25 – 4.625% depending on the lender



Ongoing Lock/Float Considerations

  • Headwinds that had plagued rates for most of the past 2 years began to die down in late 2018. A rapid decline in the stock market certainly helped drive investors into bonds (which helps rates) Highest rates in more than 7 years in Oct/Nov. 8-month lows by the end of the year

  • This is a bit of a crossroads. The rising rate environment could flare up again. We may look back at Oct/Nov and see a long-term ceiling, or we may look back at early December and see a temporary correction before more pain.

  • Either way, late 2018 was a sign that rates are willing to take opportunities presented to them. From here, it will be up to economic data, fiscal policies, and the stock market to decide on the next set of opportunities. The rougher the overall outlook, the better interest rates tend to do.
  • Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are “effective rates” that take day-to-day changes in upfront costs into consideration.

MBS RECAP: Bonds Squeezed to Best Levels in Months Ahead of Fed

March 15,2019
by admin

Uncertainty has reigned supreme for much of 2019 as traders weigh shifting economic data, potential data inconsistencies (due the shutdown), trade policy, and Brexit-driven uncertainty against central banks’ collective response. Everyone seems to be pretty confident that the Fed’s response will include some new news on the topic of its balance sheet at next week’s meeting.

That uncertainty combined with the prospects for the friendly Fed news took bonds to their best levels in months as of Tuesday. From there, it looked like we were circling the wagons in preparation for next week’s Fed, and that bonds were respecting a resistance boundary around 2.60%, or even 2.612% based on yesterday’s domestic session lows.

Traders set stop loss levels in line with 2.612%, but other traders had other ideas this morning. A few big buyers managed to wrestle yields down below 2.612%. That set off a wave of short-covering and algorithmic trading that snowballed in the 10am hour. Shorts were covered and algos were exhausted by the time 10’s tagged 2.58%.

MBS never do as well as Treasuries in these cases and today was no exception. Fannie 3.5 coupons still had a fine day, gaining 6 ticks (0.19) to end at 100-21 (100.66), right in line with their best levels of the week/month/year.

MBA has a More Upbeat View on New Home Sales

March 14,2019
by admin

Even though the January Census Bureau report on new home sales published on Thursday wasn’t all that encouraging for the spring market, the Mortgage Bankers Association (MBA) is predicting more upbeat news for February. The Association’s Builder Application Survey (BAS) shows a 6 percent increase in new home purchase applications from the previous month and a 3-point gain from February 2018. Those numbers are not seasonally adjusted.

MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 690,000 units in February 2019, based on its survey data and assumptions regarding market coverage and other factors. This is down 3.2 percent from the January pace of 713,000 units. On an unadjusted basis, the estimate is for 59,000 new home sales in February 2019, an increase of 9.3 percent from 54,000 new home sales in January.

“The housing market remains poised for a strong spring, with last month’s increase in builder applications likely leading to a healthy 7 percent year-over-year rise in new home sales,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “We are starting to see signs of more new residential construction and inventory, which increases buying opportunities for the many home shoppers who have been hampered by the ongoing lack of supply.”

Added Kan, “Slowing home-price growth, combined with stronger wage gains and lower mortgage rates, is translating to improving affordability conditions for spring buyers.”

Conventional loans accounted for 69.0 percent of loan applications and FHA loans garnered 17.9 percent. VA loans had a 12.5 percent share and RHS/USDA loans got 0.6 percent. The average loan size for new home purchases increased from $334,532 in January to $340,692 in February.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country. Utilizing this data MBA is able to provide an early estimate of new home sales volumes and information regarding the types of loans used by new home buyers. Official new home sales estimates are conducted by the Census Bureau on a monthly basis. In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application. February census numbers will be published on March 29.

Broker Products; UK says no to “no deal”; Shall We Call UMBS “Unis?”

March 14,2019
by admin

I didn’t know that America has a “most hated” type of home loan until Bloomberg “informed” me that reverse mortgages are… hated. Hated? Couldn’t the author have focused on the positives? Did you know that 87% of properties across the country are in an area eligible for 1 or more home ownership programs? Apparently.


Lender Products and Services

For a limited time only, NewRez Wholesale is offering free appraisals for Smart Series loan products (up to $650) and for FHA loan products (up to $550) through the month of March. This offer is available for new submissions only and loans must be locked by March 31st. Contact your AE today to learn more about how you can get an appraisal fee credit at your borrower’s loan closing. Some exclusions and restrictions apply. www.newrezwholesale.com. NewRez is a national mortgage lender that offers agency and non-agency lending solutions to brokers and community banks.

Caliber Home Loans, Inc. is celebrating the one-year anniversary of launching its suite of mobile apps. Since launching the three apps in the App Store and Google Play, the relationships customers, agents, builders, and business partners have with Caliber has changed. With real-time information on everything from accounts to loans in-process, working with Caliber has never been easier. The Caliber Home Loans app has been downloaded over 110,000 times by customers and received almost half a billion dollars in mortgage payments! The CaliberH2O app has widely been adopted by Caliber Loan Consultants, Account Executives, and its Wholesale Business Partners and even has a five-star rating among Android users. Agents and builders have rated the Caliber MyPipeline app as five stars in both the App Store and Google Play. Caliber is celebrating its one-year APPiversary today on social media, and invites you to say ‘Congrats Caliber’ with a LIKE.

Are you a retail loan originator, retail branch manager, direct lender or banker? Tired of losing clients and the up and downs at your retail shop? Have you considered making the move from retail to independent? BeAMortgageBroker.com can help. We are your single, no-cost source for the information, support and tools you need to become an independent mortgage broker. We can help you take the next steps toward opening your own mortgage broker shop or help match you with an independent mortgage broker in your area. Call us for a free, confidential consultation and continued support throughout the process at 800.229.6342 or learn more at BeAMortgageBroker.com.”


Capital Markets

Rates could very well sit around these levels all year. (Margins may do the same, as well as volume – is your company ready for the last six months of 2018 for all of 2019?) Regardless, there are still questions from LOs about long-term locks or float-down options (reminding me that this biz gives borrowers a free “put” – who else does that?). Sure, some of these products may just to provide conversation fodder with builders or real estate agents, require an up-front commitment fee, or have extra margin initially priced in. Most locks past 90 days include a float-down option. Once you start trying to hedge products past the typical settlement period of MBS, things become complicated. A good primer can be found at MCM’s site that is worth a review – the mechanics haven’t changed.

The creation of the UMBS (and its rare that capital markets folks have something new to deal with) has sparked some chatter. First, Julian Gutierrez, Director of Fixed Income with Stifel, shot me a note saying, “What to call UMBS? ‘Uni’ & ‘Puni.’ I received tremendous feedback on the email I sent out from customers and market participants. Rumor has it that the chairman of SIFMA has the suggestion in the in-box. The Uni/Puni train got rolling last week, I think it makes sense and we should have fun with it.”

And RiskSpan has been publishing a series of prepayment reports for the FHFA. Bernadette Kogler, CEO of RiskSpan, writes, “FHFA publishes these reports on a quarterly basis and they can be found on the FHFA website. We are happy to answer any questions.”

With nearly all indications for the Fed being on hold for much of 2019, we’ll probably see rates in a narrow range but still see them go up and down. Yesterday they moved a little higher, with the 10-year closing at 2.63%, despite a weaker-than-expected New Home Sales. Why? I don’t know, and it could just as easily reverse this today. Jobless Claims showed that employers are reluctant to cut staff due to tight labor market conditions, and import/export prices showed no inflation pressure.

The British Parliament rejected a second Brexit referendum, but voted in favor of extending Article 50 until June 30 at the latest. The UK House of Commons voted 412-202 to postpone Brexit. The delay will be short if lawmakers approve a Brexit agreement by Wednesday but will be longer if Parliament remains undecided. The delay still needs to be approved by all 27 member states of the European Union. Japan’s government might slightly downgrade its economic assessment in the March report. But overall kind of a snoozer of a day.

This morning we’ve already had the NY Fed Manufacturing Index for March (+3.7, lower than expected). Coming up are February industrial production and capacity utilization, preliminary University of Michigan Consumer Sentiment readings, and January JOLTS job openings. Friday begins with rates and agency MBS prices little changed from Thursday night’s close (the 10-year is yielding 2.61%).

Employment and Business Opportunities

A seller/servicer of MSRs is looking to partner with an investor looking to purchase $10B+ of Ginnie Mae and Agency MSRs on a subservicing retained basis. Ideal partner will have an appetite for ongoing flow/bulk purchases of MSRs in excess of $10B+/yr. Seller is specifically looking for a partner who is interested in Ginnie Mae MSRs. Interested parties should email Anjelica Nixtfor forwarding a note of interest.

Symmetry Lending, the “HELOC specialist that’s committed to service, speed, and simplicity, is growing and adding to the team! As we celebrate the launch of additional geographies, Symmetry is seeking Area Managers in several locations: California, Nevada, Maryland/DC/Virginia, Connecticut/Massachusetts, and Florida. Symmetry is currently active in 21 states, with many more scheduled for launch this year! With Symmetry’s commitment to Service, Speed, and Simplicity, this is a unique opportunity to join the team early, capture your own territory, and deliver a special experience to your wholesale broker/banker relationships. Contact us at careers@symmetrylending.com.”

If you are assessing whether you are getting the support you need to thrive, now is the time to check out the American Pacific Mortgage Spring Sales Summit. This highly anticipated event is crafted specifically for Mortgage Originators and Branch Managers so they can interact and collaborate with leadership, top producers and industry thought leaders. Come join us as our guest and discover first-hand how APM operates and commits to supporting our Originators with the tools, strategies, and resources to deliver exceptional customer experiences to grow your production. The Summit is happening in 5 key cities. Watch this short video to get a taste of what to expect and see what you are missing! For qualified candidates that want to take a serious look, contact Dustin Block (303-378-3166) for a complimentary VIP guest pass.

AHP Servicing is a socially responsible loan servicing company located in Chicago. It has an innovative and crowdfunded business model – using funds raised from many individual investors to purchase past due mortgages. Staff works with homeowners to find a way to modify or settle the debt, keeping borrowers in their homes and investors earn a preferred 10% annual return. AHP Servicing is excited to be adding a Chief Operating Officer. The COO will oversee corporate administration, technology, servicing, and more. The COO will lead a team of experts in their respective fields and ensure that their business systems, processes, and team are designed to scale. AHP Servicing provides great benefits, a collaborative environment, and the chance to know that the work you do makes a difference. If you’re an expert in mortgage servicing with a high degree of regulatory knowledge, let’s talk. Please submit your resume to Kim Rociola.

Congratulations to Aaron Duca on his move to Synergy One Lending, a Mutual of Omaha Bank company. Duca has been a top producing loan originator, branch manager, area manager and District Manager for over 15 years. Duca joined Synergy as VP, Market Production Leader and is responsible for helping Aaron Nemec, EVP, National Head of Production, drive Synergy’s sales, recruiting, market expansion, and business development across the country, among other responsibilities. Synergy is one of the fastest growing mortgage lenders in the country. If you’re looking for opportunities to learn more about the power behind Synergy’s bank-backed value proposition, please contact Aaron Duca at (469-964-0481), Aaron Nemec at (208-794-7786) or visit https://joinsynergy1.com.

Mergers and Acquisitions

I received this cable from STRATMOR Partner Garth Graham. “As you know, there is a lot of M&A activity going on, in fact STRATMOR has been involved in more deals in the last three months than we did the entire year prior. Most of these deals are asset deals, leaving behind the corporate entity that is then available as a ‘shell’ for other entities who may be wanting to enter the space or obtain the agency tickets. These shells are marketable, especially if the selling entity has been well run, originating low risk product and thus has a low tail risk associated with their legacy production. In fact, STRATMOR has such a ‘shell’ available now, which has Fannie, Freddie, Ginnie approvals and multiple state licenses.” Interested buyers should Garth Graham directly.

Certainly the “seller’s market” for lenders has diminished as the difficult financial environment continues. But buyers still encounter some degree of seller resistance. Owners are “serial entrepreneurs” who are reluctant to forego their independence. After running their own show for a long time, will they be happy reporting to a boss? Culture is a huge determinant, and any LO comp differences must be ironed out. Retaining the seller’s current management team is often mentioned as an issue despite the potential cost savings to the buyer from eliminating duplicate positions. The companies don’t need two HR departments, two IT departments, two compliance groups…

Recall that when President Trump signed legislation modifying regulations imposed after the credit crisis, banks with assets greater than $10 billion immediately surged onto the radar screen as acquisition targets. That’s due in large part to the fact that the new law raises the asset threshold for systemically important financial institutions to $250 billion from $50 billion. As such, banks with assets of $25 billion on up to about $200 billion can now buy smaller banks without having to deal with onerous regulatory scrutiny and limitations as to how they deploy capital. Banks $10 billion or larger in assets will likely see a significant surge in selling in the next few years, as larger banks ramp back up their M&A activity. In the last three weeks it was announced that…

BancorpSouth Bank ($18B, MS) will acquire Summit Bank ($472mm, FL) for $100.3mm in cash (20%) and stock (80%) and it will also acquire Texas Star Bank ($378mm, TX) for $86.7mm in cash (20%) and stock (80%) for an aggregate transaction price to tangible book of 1.89x. UMB Bank ($23B, MO) will acquire the corporate trust business of Bankers Trust Co ($4.6B, IA). In Wisconsin Horicon Bank ($756mm) will acquire Markesan State Bank ($127mm). In Oklahoma High Plains Bank ($95mm) will acquire State Guaranty Bank ($50mm). In Pennsylvania Somerset Trust Co ($1.2B) will acquire First Bank of Lilly ($21mm) for $3.4mm or 1.0x tangible book. Arkansas’ Stone Bank ($372mm) will acquire De Witt Bank and Trust Co ($94mm). In Illinois Wintrust Financial (31B) will acquire Oak Bank ($196mm) for $46mm in cash and stock. In Florida Fairwinds Credit Union ($2.3B) will acquire Friends Bank ($95mm). Up in Massachusetts Abington Bank ($314mm) will merge with Pilgrim Bank ($266mm).

Citizens Financial Group ($161B, RI) will acquire M&A advisory firm Bowstring Advisors (GA). Exchange Bank ($2.6B, CA) will acquire the CA trust and wealth management business of American Trust and Savings Bank (IA) for about $375k and get $85mm in assets under administration. Texas First Bank ($1.1B) will acquire Preferred Bank ($283mm. River Road Financial (LA) was formed to facilitate the acquisition of a commercial bank and is doing just that with the proposed acquisition of Mississippi River Bank ($112mm, LA). German American Bank ($3.9B, IN) will acquire Citizens First Bank ($476mm, KY) for $68.2mm in cash (23%) and stock (77%).

MBS Day Ahead: Not Another Ides of March Headline

March 14,2019
by admin

People who write articles every day love holidays and other dates that offer some reprieve from the need to be creative when it comes to writing headlines. On February 14th, they can incorporate love. On Halloween, it’s a good bet that you’ll see plenty of tricks, treats, and various iterations of “spooky.” And on March 15th, “Beware The Ides of March” is king.

I asked myself if we had anything to be wary of, and I got nothing–well… nothing I haven’t already mentioned. For the record, the only negative risk at the moment is that bonds choose to bounce in the low 2.6% range ahead of next week’s Fed Announcement for some reason. So far this morning, that doesn’t look like a threat.

In fact, both sides of the market (stocks and bonds) have generally been willing to push the boundaries of their best recent levels, as seen in the following chart (stocks in blue, 10yr yields in yellow).

2019-3-15 open

This is the sort of thing we tend to see when markets are betting on friendly central banks–the rising tide that lifts both debt and equity markets. Let’s not overcomplicate things! The Fed was looking unfriendly at their December meeting. A few days later, stocks were at their lowest levels in more than a year and a half (and bonds continued doing great thanks to the stock crash). Then the Fed suddenly got much friendlier.

At first, bond yields rose in concert with stocks. But then the Fed started talking about ending its balance sheet normalization much earlier than previously expected. That’s precisely when the yellow line above swooped back down to the low 2.6% range (and although it’s not highlighted, stocks also began to rally much more aggressively). Simply put, a premature end to balance sheet normalization amounts to 10s of billions of dollars of additional bond buying each month. It is effectively another “QE” program relative to the status quo. Simultaneous gains in stocks and bonds is exactly what we’d expect to be seeing.

Keep in mind that all of this is building toward next week’s Fed announcement, where market participants are pretty sure they’ll get a lot more detail on how/when/why the Fed is abandoning normalization. If there’s anything to beware of around mid-March, it’s the possibility that the Fed underwhelms in that regard.