Skip to content

MBS RECAP: Bonds Scramble Back to Unchanged, Leaving Outlook Cloudy

October 17,2017
by admin

Treasuries and MBS have spent the past 2 days trading well inside the range set by last Friday’s volatility (big rally following CPI data). Unfortunately, the central tendency during those 2 days has been toward moderately weaker levels. This casts some doubt on what looked like a clear signal on Friday, but it’s too soon to rule out additional gains based on today’s trading.

After all, bonds did manage to make it back to unchanged in many cases. Fannie 3.5 MBS were perfectly unchanged and 10yr yields ended the day just barely into positive territory. Things looked more bleak around 9am this morning when bonds had taken a noticeable turn toward weaker levels.

There were no clear fundamental justifications for the movement at the time (import price data was 20 minutes before the bigger moves in bonds), but the declining volumes and the lack of correlation with stock market movement suggest bond-specific tradeflows. In other words, some big traders made some big trades just before 9am and these served as inspiration for other traders who’d been waiting for a sign. The lower volume environment allows such trading to have a bigger effect on prices and yields than it otherwise might.

In general, the focus for bond traders has been the underperformance of shorter-term yields vs longer-term yields (curve flattening). One of the simplest conclusions to draw from such movement is that traders increasingly see a rate hike in the short term but not a corresponding uptick in growth or inflation.

Mortgage Rates Rise a Bit More From Recent Lows

October 16,2017
by admin

Mortgage rates were at their best levels in roughly a month last Friday afternoon. Since then, they’ve risen modestly on each of the past two business days. As has been the case for quite some time, day-to-day movement continues to be very tame. The actual interest rates at the top of loan quotes rarely change from one day to the next. Instead, fine-tuning adjustments to the overall cost of financing come courtesy of slightly higher upfront costs–at least in today’s case.

In other words, if you were being quoted 3.875% yesterday on a 30yr loan yesterday, chances are you’d be seeing the same rate today, but with upfront costs just a bit higher (or a lender credit that’s just a bit lower, depending on the scenario).

In the bigger picture, rates are attempting to push lower after rising fairly quickly from early September through early October. The weakness (read: slightly higher costs) over the past 2 days doesn’t derail that effort, but that could change if the weakness persists for another day or two.


Loan Originator Perspective

Bonds continued hanging within their narrow recent ranges today, and my pricing was virtually identical to Monday’s. Not sure what it will take to jolt rates higher/lower from here, but it appears significant motivation will be required. Floating could net small returns, the question is whether it’s worth the risk, given likelihood of minimal gains. If you do float, be prepared for pricing to get worse, it happens regularly! –Ted Rood, Senior Originator

Following an ugly morning, bonds have managed to rebound nicely. A few lenders have repriced for the better. Since rate sheets came out when bonds were at their worst levels, i think it is worth the risk to float overnight. –Victor Burek, Churchill Mortgage


Today’s Most Prevalent Rates

  • 30YR FIXED – 3.875-4.0%
  • FHA/VA – 3.5%
  • 15 YEAR FIXED – 3.25%
  • 5 YEAR ARMS – 2.75 – 3.25% depending on the lender



Ongoing Lock/Float Considerations

  • 2017 has proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016. Most of the rate spike was done by the end of 2016 and we’ve generally moved sideways to lower since then

  • The biggest question is whether or not this counter-intuitive trend has an expiration date. Rates haven’t been immune from brief corrections back toward higher levels, and each correction causes concern that the good times are over.

  • Despite those concerns, we’ve seen rates make new lows in April, June, and September. Although rates have been rising since early September, they’d have to move even higher before we’d consider a change in the bigger picture theme.

  • All of the above having been said, past precedent suggests we’re due for a much bigger dose of volatility some time soon.
  • 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 Day Ahead: Quickly Becoming a Battle to Remain in a Friendly Trend

October 16,2017
by admin

As we discussed last week, the positive technical signals don’t get much clearer than they did after Friday’s CPI data (weak inflation helped bonds break a floor that had been stubbornly holding for several weeks. At the time, the biggest risk as I saw it was that the positive cues were “too obvious.” When there’s such a resounding confluence of technical and fundamental input, it makes sense to ask the question: if everyone wants to be a buyer, who are they going to buy from?

The weakness seen yesterday (and so far today) is exactly what we risk by following the technicals to the letter. Frustratingly enough, we still haven’t seen enough weakness to abandon our hope for a broader shift toward lower rates. That could be a decision for today, however, if bonds end up selling-off in a bigger way.

This chart was snapped a few minutes before some bigger selling that has since taking yields up to 2.327. That selling puts us right at the breaking point where the lines on the MACD section at the bottom of the chart are the same size (as opposed to trending lower, which is what we want).

2017-10-17 open

Long story short, today is now all about watching out for any additional weakness, and increasingly favoring locking if yields rise much above 2.327. The truly risk-tolerant among you might consider the behavior of the MACD technical in July where we’d just broken below the zero line and had begun to reverse course only for the broader rally to resume 3-4 days later. I would warn that July wasn’t a perfectly comparable precedent (the current rally hasn’t been quite as strong, and the preceding sell-off was broader-based this time around), so take that example with a grain of salt if bonds do continue to weaken throughout the day.

If, however, the worse we end up seeing is this run up to 2.327 and it’s followed by a nice bounce back below 2.316-ish, that would be about as perfect a technical confirmation of broader positive momentum as we’re going to get (because it would mean that we’ve traded through last week’s big caveat of the technicals looking “too obvious”).

Wire Fraud, MBI and LEP Products; HMDA Stats; The Fed’s Leadership

October 16,2017
by admin

Does the Fed Chairman make a difference? Yes. Taylor and Powell’s names continue to be mentioned, although Trump is set to interview Janet Yellen Thursday. It wouldn’t surprise anyone if Janet Yellen was being given the boot, unfortunately. Trump must decide whether to risk jarring the markets to ensure deregulation. After all, she is an Obama appointee, and Donald Trump has shown disdain for all things Obama. (More on Yellen in the capital markets section below.)

Products and Conferences

In correspondent news, AmeriHome’s Correspondent Scratch and Dent Program continues to help originators sell loans with origination defects. The AmeriHome program is designed to save clients time and money shopping for buyers and negotiating new contracts by having AmeriHome handle these transactions. A sampling of the issues that can be priced include DTI/Income/loan amounts, investor overlays, TRID/compliance, incomplete documentation, uninsurable loans, and non-agency jumbo fallout. AmeriHome is an industry-leader in service and operational support and is committed to providing the same accurate and timely communication on your S&D business. If interested, please contact your AmeriHome Correspondent Sales Representative (or email CLsales@amerihome.com) and add our direct email snd@amerihome.com to your email distributions.

Planet Home Lending continues to expand the product lineup for its growing correspondent customer base with the addition of FHA 203(h) loans and a new jumbo program. Customers serving natural disaster victims in the Gulf states, California, and elsewhere can use 203(h) to help renters and homeowners rebuild or buy in a new location. Planet’s 203(h) offers 100% financing, FICOs to 500, financed closing costs, and no minimum borrower contribution. Planet has also added a correspondent jumbo program with purchase and refis to $2.5 million with LTVs to 80%, and cash-outs to $1.5 million. Make the Connection to great loans – contact Jim Loving (414.270.0027).

“A common discussion during the beginning of conference season seems to be centering around truly digitizing the entire workflow, to include automating the calculation and validation of income. Just as it was at the Digital Mortgage Conference in San Francisco, it is likely to continue into this year’s MBA Annual in Denver. LoanBeam’s automated income extraction and calculation technology solves the dilemma facing modern mortgage lenders – most of their borrowers’ income cannot be validated with digital data sources, especially those with complex income streams. LoanBeam provides a solution that can convert any income document into a digital output capable of being calculated automatically and assimilated into their process flow, today.”

The release of the 2016 HMDA data revealed overall product trends in the market, according to Richey May’s free HMDA Market Share Dashboard. Conventional loan volume increased 20%, in line with the overall increase of 19%, while FHA volume lagged with a 9% increase, and VA volume reflected a robust 38% increase. Overall purchases represented 49% of the market, with strong purchase markets in Texas (63%), Florida (63%) and New York (64%), while refis, representing 47% of the market, were strongest In California (61%). Overall production volume increases were strongest in the western United States, with Washington (29%) leading the nation. For even more data points relevant to your business, check out Richey May’s dynamic HMDA Market Share Dashboard.

The Cost-To-Originate a loan has skyrocketed over the past decade, as operational productivity has fallen off a cliff. Outsourcing your back-office processes to String Real Estate Information Services can help you solve these issues right away. String supports the mortgage origination life cycle from app to close: processing support, pre-underwriting, closing review and post-closing. We can help shorten your cycle time, turn your fixed costs into variable costs, and improve your margins by up to 20%. If you’re attending the MBA Annual Convention in Denver, schedule a meeting with us to learn how String can improve your P&L within 30 days or less.

Multiple studies have shown that your borrower experience, above any other factor, drives your business forward. Technology has become a critical expectation to a positive borrower experience. Lightweight borrower-facing tools are the answer for LOs looking to transform the borrower experience. Leading the charge is Maxwell, awarded HousingWire’s 100 Most Innovative Companies for 2017. The secure digital portal provides automated document collection with direct integrations of thousands of financial institutions (even automated paystubs!), a fully customizable online loan application, white labeling, LOS integrations, and agent milestone notifications and borrower reminders via email and text/SMS. It’s no surprise Maxwell has been chosen by hundreds of lenders to drive their business forward! All of this starts at only $99/month per LO with free accounts for team members. To learn more and request a demo, visit www.himaxwell.com

Lenders and settlement agents, I’ve written about wire fraud in the past. This is the $2-billion-dollar problem that goes unmitigated for many in our space. ATS Secured has a wire fraud solution that easily integrates with your existing workflow and systems, and reduces costs, and closing times. “Wire fraud at the originating or settlement level is up 1,300% since 2015. And the average loss is $100,000,” says Jay Michalowski, Senior Managing Director at ATS Secured. “Our solutions mitigate this fraud and risk for our clients.” From verifying and authenticating every signer and approver, to validating all wire instructions, to secure messaging and connectivity directly to escrow companies, ATS guarantee your wires and funds get to the right destination. Speak with ATS Secured at the MBA’s Annual Convention and make your trip to Denver productive. Contact Jay Michalowski to pre-arrange a meeting. ATS Secured: Sophisticated tools to combat today’s sophisticated crime.

The MBA stated that limited English proficiency (LEP) could create a liability for lenders since this is a key priority for many regulators. A CFPB official said, “If every loan application had a talk’uments file, our job (CFPB) would be done.” Available in ENGLISH and SPANISH, talk’uments is a new consumer information delivery model that displays borrower specific loan data through interactive loan and disclosure technology – from pre-sale through loan closing. Talk’uments increases loan originations, as it eliminates LEP risk and cuts compliance, legal and regulatory costs for all mortgage transactions, and, by providing market ready borrowers with what they want – interactive loan information specific to their loan request (i.e. Loan Product Info, LE and CD review, Application & Closing Docs explanations, and Borrower Responsibilities). Talk’uments is the first of its kind in the field of interactive loan and disclosure technology. For more information or to visit with talk’uments at the national MBA conference (booth 1322), contact George Baker.

Corridor Mortgage’s Regional Vice President – Rick Trott has found a formula for “doing more with less – closing more loans with the same amount of people.” Trott has been able to eliminate unnecessary manual processes and automate repetitive tasks during the loan origination cycle using mortgage business intelligence (MBI) technology. Like hundreds of other lenders, Corridor Mortgage is leveraging the power of MBI to transform their lending operation and “deliver a better experience for the loan officers” through improved visibility and better control over their mortgage pipeline. Motivity’s leading MBI solution minimizes the amount of time, money and resources required to implement this technology. As the mortgage industry’s most comprehensive MBI toolset, it delivers pre-configured insights and dashboards providing deep visibility into every aspect of the loan origination process. Learn more about how Corridor Mortgage and hundreds of other lenders are using MBI to gain a competitive advantage.


Training and Upcoming Events

Have you mapped out your pathway to success for 2018? Sign up for Business Planning, the next ENERGY Webinar from XINNIX, The Mortgage Academy on Wednesday, November 8 at 2PM ET. No matter where you are in your career, from a rookie to a branch manager, every mortgage professional needs to develop a strategy for the upcoming year. This webinar will give you the tools you need to create, implement, and review your business plan so you can elevate your production to new heights in 2018! Click here to sign up today!

Of course, there is the big MBA shindig in Denver. Has anyone noticed that conferences are now eating into our weekends? That aside, it should be a grand conference.

Are you signed up for the TMBA 67th Annual Educational Marketplace Mortgage Education & Dialogue? Registration is still under way for MED Talks November 6th & 7th at the Marriott Legacy Town Center in Plano Texas.

The CMLA’s Luncheon on November 16th will discuss “Colorado Marijuana Grows Unintended Consequences” with guest speaker Detective M. Adam Hughes. This program covers the new meth houses and the destruction being done in neighborhoods, the marijuana black market and obstacles and dangers for law enforcement. Registration deadline is November 13th.

National MI presents “Advanced Self-Employed Borrower” on November 9. This session is a deep dive into the various schedules and tax code rules that impact a borrower’s income and come into play when underwriting the self-employed borrower. It will help if registrants have taken the basic Self-Employed Borrower course, but it is not required. Presented by Marianne Collins of Diehl Mortgage Training and Compliance.

And NMI offers “Multigenerational Marketing” on November 14. One size doesn’t fit all when it comes to marketing to Baby Boomers, Generation X, and Millennials. This session will introduce key insights into, and parallels between these generations to help participants broaden the appeal of their marketing, and create the most effective multigenerational strategy. Presented by Kristin Messerli of Cultural Outreach.


Capital Markets

Financial markets don’t like uncertainty. And right now there is uncertainty regarding the leadership of the Federal Reserve, the most powerful economic position in the world. Chair Yellen’s appointed term is up next year, but the Trump Administration has thrown the job up in the air: who will it appoint?

Chair Yellen has had a sure but steady hand in running the Fed during difficult times. With a less skilled leader the Fed could have become much more divided and less decisive. Instead of that path, the Fed, under Yellen’s leadership, has moved forward. Her grasp is excellent that the Fed impacts both the poor and the rich through its macro and regulatory policies. She has walked a fine line between government influence and the needs of the private sector.

It will not be easy going forward. The Trump Administration is still calling for large budget deficits in an economy that many believe is close to full employment. In a highly politicized environment marked by extreme uncertainty, the nation needs a calm hand, expertise, and wisdom. I hope that President Trump doesn’t do away with Janet Yellen merely because she is an Obama appointee.

In fact, U.S. Treasuries began the week down yesterday after it was reported that President Trump was impressed with John Taylor’s interview for the Fed Chair post. Current Chair Janet Yellen’s turn in Thursday. Across the pond, reports indicate that the European Central Bank’s governing council is deeply divided on announcing a fixed end date for the asset purchase program.

Today’s data includes September Import Prices and Export Prices (import prices +.7%, strong, exports +.8%), September Industrial Production and Capacity Utilization, and the October NAHB Housing Market Index. Philadelphia Fed President Patrick Harker, a FOMC voter, will speak later this morning. We start Tuesday with rates a shade higher than Monday’s close: the 10-year is yielding 2.31% and agency MBS prices are down/worse slightly.



Jobs and Business Opportunities

An independent mortgage banker is looking to sell its corporation. The corporation has had HUD Full Eagle approval since 2008 and VA approval since 2011 and is in excellent standing. This sale would be for HUD and VA licensing purposes. Interested parties may contact me directly to forward their note.

“Interested in joining a stable and secure lender with a 30+ year history of success? Embrace Home Loans is looking for self-sourced, purchase focused Branch Managers, Sales Managers, and Loan Officers. Embrace has been recognized for the fifth straight year by Inc. as one of the Fastest Growing Companies in America, making it an excellent career option. For 10 straight years Embrace has achieved a 98% Customer Service Rating and has been recognized by Fortune no less than seven times as one of the Top 25 Mid-size Companies to Work for in America. Licensed in 46 states plus DC, Embrace ranks as one of the top private mortgage lenders in America. If you’re interested in working with a supportive, dynamic, and productive company, contact Patrick Mullen, Director of Recruiting, or check out Join Embrace. Embrace your future – join our team today!”

Construction Numbers Look Much Better Broken Down by State

October 16,2017
by admin

It has been a rather dismal spring and summer for construction, one in which permitting has declined in three out of the last four months. Going more granular, however, a report from the National Association of Home Builders (NAHB) finds that residential permitting, and thus construction, is picking up steam in many states.

The Census Bureau releases two separate reports covering aspects of residential construction each month. The one MND readers are most familiar with is the Residential Construction Report which provides details on the issuing of building permits, housing starts, and unit completions. It is based on the Survey of Construction and is partially funded by the Department of Housing and Urban Development. The second report focuses primarily on permits and presents data from the Building Permits Survey (BPS). The methodology behind the two surveys differs and so does the level of reporting. The Residential Construction Report presents data on a nationwide basis and for each of the four regions; the results of the BPS are available at state and local levels.

Danushka Nanayakkara-Skillington, in a post in the NAHB’s Eye on Housing blog, digs down into that state level BPS data and finds that that most states are showing strength on a year-over-year basis. Unfortunately, her analysis is ragged as she inexplicably shifts the basis of the discussion between year-over-year and year-to-date.

First, she looked at year-to-date data (through August) for both 2016 and 2017, and found both the BPS and the SOC reporting roughly similar numbers on a nationwide basis. The SOC counted 875,500 permits year-to-date, up 7.5 percent from the same period in 2016; the BPS number was 852,825, a 7.7 percent increase.

Switching to year-over-year numbers, she reports that between August 2016 and August 2017, 37 states and the District of Columbia saw growth in the total number of permits issued. In twenty-two states and the District of Columbia that growth exceeded 7.7 percent while 13 states had a decline in growth. Montana topped the list at 31.9 percent while Maryland only grew by 0.7 percent. The 13 states that lost ground were led by Connecticut with a 20.5 percent decrease.

Ten states accounted for nearly 55 percent of all permits issued; Texas, Florida, California, North Carolina, Georgia, Washington, Colorado, Tennessee, New York, and Arizona. However, when the size of the state was muted by reporting permits on a per capita basis, the picture shifts.

Over the eight months ending in August 2017, the total number of single-family permits issued nationwide according to the BPS reached 561,938. This is 10.1 percent ahead of its level over the first eight months of 2016 with 510,590 permits. The results from the SOC are similar, single-family permits over the first eight months of 2017 numbered 564,000, up 10.7 percent from the 509,600 issued over the same period in 2016.

At the state level, the author found 43 states and the District of Columbia with growth in single-family permitting between August 2016 to August 2017. Similar to total permits, 22 states recorded a growth above 10.1% but seven states had a decline in growth. Hawaii had the highest growth rate during this time at 28.2% while North Dakota declined by 8.3%.

In the single-family sector, Texas led with 79,236 permits issued year-to-date in August 2017, while the lowest number came from the District of Columbia with 251 permits. Nine of the top ten permitting states also led in single-family permits, with South Carolina taking Washington’s place. Adjusted for population, the leading states again shift.

According to the BPS where were 290,998 multi-family permits issued nationwide through August 2017 compared to 280,923 during the same period in 2016, an increase of 3.5 percent. The SOC reports 293,000 multi-family permits over the eight-month period, 2.0 percent more than the 287,900 issued in 2016.

Between August 2016 to August 2017, 26 states and the District of Columbia increased this permitting while 25 states recorded a decline. Twenty-four states and the District of Columbia recorded a growth above 3.5% with Mississippi leading the way with a growth of 185%, from 327 to 932, while Rhode Island had the largest decline of 71.7%.

While Texas issued the most multi-family permits year-to-date, they are ninth on a per-capita basis, dwarfed by the District of Columbia which had twice the activity of second-place Colorado. Despite its dramatic increase, Mississippi still only issued 0.2 permits per thousand people.

Builders’ Confidence Returns as Hurricane Worries Wane

October 16,2017
by admin

After reacting strongly to Hurricanes Harvey and Irma with a four-point drop in September, the Housing Market Index (HMI) regained its footing in October. The National Association of Home Builders (NAHB) says the HMI, which measures its new home builder member’s attitudes toward the new home market gained four points this month, reaching 68, its highest reading since May. Analysts had expected the index, which NAHB cosponsors with Wells Fargo, to remain unchanged from September at 64.

“This month’s report shows that home builders are rebounding from the initial shock of the hurricanes,” said NAHB Chairman Granger MacDonald. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index 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.

All three HMI components gained ground in October. Both the component gauging current sales conditions and the one charting sales expectations over the next six months increased 5 points, reaching 75 and 78 respectively. Meanwhile, the component measuring buyer traffic ticked up a single point to 48.

Regional scores for the HMI are reported as three-month moving averages. The index for the South rose two points to 68 and the Northeast rose one point to 50. Both the West and Midwest remained unchanged at 77 and 63, respectively.

“It is encouraging to see builder confidence return to the high 60s levels we saw in the spring and summer,” said NAHB Chief Economist Robert Dietz. “With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market continue to strengthen at a modest rate in the months ahead.”

MBS RECAP: Political Headlines Cause Volatility in a Narrow Range

October 16,2017
by admin

If the only things you could observe about today’s bond trading were volumes and “buy vs sell,” there were a few moments where things got fairly interesting–especially after 2pm. That’s when the biggest volume and the biggest movement of the day occurred.

While there were several headlines in play at the time, it was Trump’s off-the-cuff reference to a surprise economic development bill that would be announced “later on,” after sufficiently focusing on “tax cuts and some other things right now,” that most clearly rocked bond markets.

“Rocked” is a relative term, to be sure. If you wanted to talk up the headline, you could point out that it resulted in a bigger single minute of volume in Treasury Futures than last week’s very important CPI numbers. If you wanted to offer a caveat or two, you could point out that bonds didn’t really move much in that minute, and that last week’s CPI numbers created vastly greater sustained momentum. Even so, it was the highlight of the afternoon, and it pushed bonds gradually to their weakest levels of the day.

Refreshingly, 10yr yields held below the important technical ceiling near the 200-day moving average (also the high volume pivot point from the September 27th tax plan announcement sell-off) at 2.314%. Technical indicators didn’t reverse course after Friday’s positive shift, but they would threaten to do so if we lose a similar amount of ground tomorrow. The current showdown is between that 2.314-ish ceiling and a floor of 2.28%, both in terms of 10yr yields..

Fannie 3.5 MBS held above 103-00, and we never saw quite enough weakness for negative reprices among mortgage lenders.

Are YOU Engaged in Real Estate?

October 15,2017
by admin

Are YOU Engaged in Real Estate? Then Register NOW! Seats are LIMITED!



HAR Engage

Thursday, October 19

Norris Conference Center at CityCentre

The must-attend conference for Engaged HAR members is THIS THURSDAY! Your registration includes access to more than 10 different sessions, a seated lunch, the member lounge, free parking and WiFi.

Hurry! Only 50 seats left!

Register now at www.har.com/engage


HAR ENGAGE Schedule



9 a.m.


#GetSocialSmart: How To Hone Your Social Media Strategy – Opening session with Katie Lance


10 a.m.

Top 10 Things a New Agent Needs to Know

– Katie Maxwell

Punk Rock & Real Estate: How To Go From Touring in a Van to $350M in Volume – Jenelle Isaacson


11 a.m.

Tips and Proven Ideas to Grow Your New Business and Become More Efficient Doing So – Linsey Ehle

The Future Revealed: How Next Gen Cars Will Change Real Estate – Kevin Foreman


12 p.m.

Hey Nobu, What Three Things Keep You Up atNight? – Nobu Hata


1:30 p.m.

Increasing Your Value Proposition & How to Handle Objections – Richard Ortiz

New Tools Every Agent Needs to Know About – Taqi Rizvi


2:30 p.m.

Engaging Your Business with a Bang! – Jeremy Conaway

Why Are Newer Agents Kicking Your Butt? – Katie Maxwell


3:30 p.m.

iBuyers: The Value of Convenience? – Zillow, Redfin and Open Door execs discuss today’s real estate industry

*Conference is approved for 6 hours of Continuing Education credits.


$119 Professional Pricing – Hurry! Only 50 seats left!

Register online at www.har.com/engage.

Source: Houston Association of REALTORS®

The EDGE: Week of October 16

October 15,2017
by admin

The EDGE: Beverly Hills Celeb Broker Mauricio Umansky on Selling the Playboy Mansion, Being Serenaded by MJ and More, and ENGAGE This Thursday

Click here to download edge101617

Source: Houston Association of REALTORS®

Big Bank Earnings and News; M&A Continues

October 15,2017
by admin

Given the latest tax plan, will the mortgage interest deduction stay, but become worthless? The GOP blueprint would double the standard deduction for individuals and couples, making the mortgage interest deduction worthless for anyone who doesn’t itemize. Stay tuned…

Bank News

Here’s a little trivia for tonight’s Happy Hour: baby boomers control about 67% of all bank deposits.

JPMorgan has partnered with PayPal to allow Chase customers to link cards to PayPal accounts. Meanwhile, Citibank has also partnered with PayPal to allow Citi customers to pay using ThankYou points at merchants that accept PayPal.

For a Basel III update, The Basel Committee for Banking Supervision is close to reaching an agreement on capital rules for banks. France has complicated the final negotiations — expected to take place on at this week’s International Monetary Fund meeting in Washington, D.C. — by setting a hard line against any additional capital requirements for banks. The industry waits for the potential impact on servicing rights.

Wells Fargo, the third-largest U.S. bank by assets but #1 residential lender in the retail and correspondent channels, said its third-quarter profit fell 19 percent, due mostly to a $1 billion mortgage litigation accrual. For the quarter, loan growth and the net interest margin disappointed, but expense management helped soften the blow. Yes, “The Coach” took a $1 billion mortgage litigation accrual in the third quarter because it is in talks with a task force from the U.S. Department of Justice, per Chief Financial Officer John Shrewsberry. Wells Fargo has had a sales practices scandal, opening perhaps 3.5 million accounts in customers’ names without their permission, signing others up for unwanted auto insurance, charging some for a mortgage rate-lock feature they did not request, and tacking other costly add-ons to accounts. This is all in addition to the same challenges as competing lenders: a drop in mortgage refinancing, interest income rising slowly after a prolonged period of rock-bottom rates, expensive technology investments, and new regulations.

House Democrats have urged bank regulators to remove Wells Fargo’s bank charter because of their 2016 fraud scandal. They argue that this scale of “egregious consumer abuses” could threaten the safety and soundness of the financial system.

So the big banks reported earnings. When one looks at Bank of America, Chase, Wells Fargo, and PNC, mortgage production increased +7% QoQ on average, which compares with industry expectations for flat production QoQ. MSR fair value marks rose +1%, while gain on sale margins dropped 2%. Focusing on Wells, given its current status as the #1 lender, mortgage banking income dropped 37% from last year (from $1.7 billion in Q3 of 2016 to just over $1 billion in Q3 of 2017). Net servicing income saw a year-over-year decline of 14%, from $359 billion last year to $309 million.

Bank “shutterings” have fallen way off this year, but we had one Friday. The Farmers and Merchants State Bank of Argonia, Argonia, Kansas, was closed, and bank regulators entered into a purchase and assumption agreement with Conway Bank, Conway Springs, Kansas, to assume all its deposits.

Throughout all this, the bank mergers and acquisitions continue, for varying reasons…not the least of which is the cost of banking and its perceived potential liabilities. Playing some catch up here with announcements, Advia Credit Union ($1.4B, MI) will acquire Peoples Bank of Elkhorn ($230mm, WI). Also in Wisconsin, Associated Bank ($29B) will acquire Bank Mutual ($2.7B) for about $482mm in stock (100%) or 1.6x tangible book. In Big Sky Country Opportunity Bank of Montana ($704mm) will acquire Ruby Valley Bank ($90mm) for about $18mm in cash (55%) and stock (45%) or about 1.29x tangible book. In Oklahoma BancFirst ($7B) will acquire First Bank & Trust Co ($280mm) and First Bank of Chandler ($90mm). Associated Bank ($30B, WI) will acquire wealth management firm Whitnell & Co.

In Louisiana Business First Bank ($1.2B) will acquire MBL Bank ($323mm) for about $76.1mm in cash or about 1.57x tangible book. Alabama’s Troy Bank & Trust ($853mm) will acquire

First National Bank of Brundidge ($94mm). In Indiana MutualBank ($1.6B) will acquire BloomBank ($398mm) for about $65.6mm in cash (29%) & stock (71%) or about 1.58x tangible book. Out in Colorado Guaranty Bank and Trust Co ($3.4B) will acquire Castle Rock Bank ($144mm) for about $23mm in stock (100%) or about 1.45x tangible book.

JLL Research finds that since the financial crisis, banks and credit unions have closed over 10,000 branches or about 3 per day. Although bank branches are closing, the end of the branch is not yet upon us. In fact, the number of branches for institutions with <$10B in assets slightly increased by 0.2% last year, while branches of all other banks went down by 2.3%, according to FDIC data.

Steve Brown with PCBB points out that, “At a high level, rural areas still depend on community banks. Indeed, community banks account for more than 67% of all deposit growth in rural areas, with nearly 4.8 branches for every 10,000 people vs. 2.6 branches for every 10,000 in urban areas. One issue to consider here, though, is that deposit growth is climbing fastest in metropolitan areas. Further, bigger bank customers are doing more of their banking through electronic or alternative channels in cities, rather than in branches. Given the cost of branches and the rapid growth of digital banking, a higher proportion of branches that remain open, or are

Opening, are in rural areas. As such, branches need to add higher value.”


Capital Markets

To reiterate the Fed meeting minutes last week, an interest-rate increase in December has strong support among the members of the Federal Open Market Committee, minutes from its September meeting show. Officials said they were confident the economy is growing steadily, despite the slow rise of inflation. The minutes showed three schools of thought within the Fed. The largest group felt that another rate increase would be warranted unless the medium-term outlook changed notably. The second group said that their decision would depend on how the data come out between mid-September and mid-December. The smallest group, comprised of the Doves, wanted to defer any further rate hikes until inflation was “clearly on a path toward” 2 percent.

U.S. Treasuries ended last week’s abbreviated week on a higher note, though a weak September CPI dominated Friday’s headlines and did little to clarify the underlying inflation trend the Fed is seeking. There’s now some chatter the Fed would be prudent to hold off on a rate hike at its December meeting, however a 2.2% YoY increase, up from 1.9% in August, does not run afoul of the Fed’s price stability mandate. The implied likelihood of a December rate hike ticked up to 82.9% from 82.7% yesterday, according to the fed funds futures market

Looking to this week, today we have the release of October’s Empire Manufacturing numbers. Tomorrow sees September Import/Export Prices, the Industrial Production & Capacity Utilization couplet, and October NAHB Housing Market Index. Wednesday has September Housing Starts & Building Permits, and the Fed’s Beige Book, while Thursday has weekly job claims & the Philly Fed Survey. Friday has September Existing Home Sales. We find rates a shade higher versus Friday, with the 10-year yielding 2.29% and agency MBS prices down .125.

Jobs, Products, and Recruiting Tools

National MI is expanding its sales team and adding an additional Sales Account Representative who will reside in Boise, ID market. Responsibilities include to promote the sale of National MI products, services, and programs to clients through a consultative selling approach via personal sales calls and email/phone contact. This individual will also assist in sourcing new business from originators, and will manage the relationships of specific clients by serving as a customer advocate, educator, and loan issue problem-solver. Experience in client relationship management and training is imperative, and strong research, process improvement, and presentation skills are required. Headquartered in the San Francisco Bay Area, National MI is a U.S.-based, private mortgage insurer enabling low down payment borrowers to realize homeownership. National MI has a GREAT culture, compensation and benefits. For the complete job posting, see National MI’s careers page.

DocProbe, “the nation’s premier providers of trailing document fulfillment services, is currently looking to further expand our close-knit Business Development team in the West Coast and Northeast regions as well as other nationwide positions. The is an exciting opportunity for Account Executives with experience selling to Mortgage Bankers, who possess the drive and ambition to make calls, network, and have the face-to-face visits necessary for success. The ideal candidate possesses outstanding interpersonal skills and has an established mortgage banker client base within which they can network. Interested contenders may confidentially submit resume for consideration to Libi Pruzansky. We will also be attending the MBA Annual Conference in Denver on October 22nd-25th to present our services. Please email Nick Erlanger to schedule an appointment with a specialist.”

Loan officers should know that, “There’s a great opportunity in the 62+ market. Are you prepared to capture it? Today’s redesigned reverse mortgages are key to aligning your business for the future – with refinance, home purchase and HELOC alternative options. Learn how you can increase revenue and better serve this growing demographic by adding reverse mortgages to your product mix. Click here to register for an upcoming educational webinar presented by Reverse Mortgage Funding LLC (RMF).”

“Altisource, a leading provider in end-to-end services and technologies to the mortgage and real estate industries, is seeking an energetic, creative, and motivated National Sales Executive to join its rapidly growing Origination Solutions team. The Origination Solutions group delivers best-in-class products and services that help mortgage originators and investors operate, scale and protect their business. As a National Sales Executive, you will help build the Altisource Origination Solutions vertical book of clients using your world-class solutions selling and enterprise relationship building skills. You’ll be tasked with identifying and closing deals on client partnership opportunities that can be best served by Altisource’s Originations Solutions platform throughout the nation. If you are ready for an exciting challenge with huge growth upside and you have an impressive enterprise sales background within the mortgage industry, the Altisource team has a home for you. What are you waiting for? Apply today!

Have you ever wanted to know which producers you should be calling in your market, but don’t know where to find them? Now you can. With Model Match Opportunity Lead Finder you get the data that allows you to focus on the best match for your company. This tool gives you visibility into an originator’s previous year’s volume, trailing 12-months volume, as well as a trailing 3-months volume so you can be intentional about who you are calling. The data also includes visibility into unit count, average loan amount, as well as purchase percentage and product mix. Click Here to get set up to receive Lead Names or schedule a time to meet our team at the National MBA Annual Convention in Denver in October. Pick a day and time using the link and we can show all this to you LIVE and in person. Model Match is helping our clients grow their business organically through strategic and structured recruiting efforts.

FundingShield – has teamed up with NFP Corp. aa global top insurance brokerage and Pioneer Underwriters to launch an enhanced New York State Crimes Insurance Policy that provides Lenders in the state of New York with the highest level of protection to date in the event of theft of client funds by law firm partners. No other insurance policies provide this coverage which many lenders are required to demand of their legal service providers who conduct closings on their behalf. Benefit to NY State lenders is coverage in the event of fund misappropriation by law firm partners in line with best practices and funding security requirements. Benefit to NY State lawyers is enhanced policy coverage, in many cases at lower cost, that provide your clients with insurance for the risk that theft takes place by bad acting law firm partners. FundingShield is a financial technology company focused on closing wire fraud prevention, secure mortgage payments and third-party service provider risk & compliance with solutions for lenders, borrowers and title companies trying to manage fund movements and counterparties. For more information please contact Info@fundingshield.com and also review the Press Release on the partnership.

Ohio, Georgia, North/South Carolina, Indiana, and Florida Branch Managers – if you are looking for a highly innovative retail mortgage platform whose systems are in place to help you grow, email Marissa@menlocompany.com to learn more. The Platform offers low end FHA to high end Jumbo ($1-$5M new construction), non-warrantable condos, and true foreign national products. Again, email Marissa Vest to review a structured compensation package for you and your production team.