Sep. 25: Mortgage jobs & expansion; bank M&A; vendor updates; are you ready for autumn & winter lending?

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. Read more...

A Harvard study tells us that 35% of American households (both homeowners and renters) spend at least 30% of their pre-tax income on housing costs. I remember back in college a friend of mine lived in a closet…ok, it wasn’t actually a closet, but a room without windows is pretty close to one. I guess times have changed, and maybe the logic of student housing, according to Zillow’s College Towns: Buy v Rent? In the question of “rent versus buy”, it really comes down to the breakeven horizon; Zillow’s breakeven horizon figure is the time it takes for the accumulating costs of renting a unit to exceed the costs of having purchased the residence from the beginning. The breakdown of university towns, and their corresponding numbers, incorporates all costs associated with buying and renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities, opportunity cost of buying a home, maintenance and renovation costs. It then factors in historic and anticipated home value appreciation rates, rental prices and rental appreciation rates.

 

A technology company who is actively involved in the mortgage lending space is looking for Senior Mortgage Underwriters to work part-time from home. The ideal candidates for this position will have expert knowledge of Agency and/or Government and USDA underwriting guidelines, strong written and verbal communication skills as well as excellent computer skills (mainly with Microsoft Word, Excel & Internet Explorer). “Excellent compensation based on the volume and accuracy of the work produced.” Interested candidates should inquire/apply to support@theruletool.com. The software specializes in researching agency rules and investor overlays: The Rule Tool by Take Three Technologies.

 

Congratulations are due as PRMG opened four new retail branch operations in the Pacific Northwest and Southeast regions. PRMG was “recently ranked No.2 of the 50 best companies to work for and continues to show signs of organic growth. PRMG’s national advertising campaign is aggressive, conveying company strength, size and stability and is geared toward expanding their national footprint in retail, wholesale and correspondent lending. PRMG is an approved Seller/Servicer with Fannie Mae and an approved Ginnie Mae Issuer.” For more information on the company’s plans and employment, contact Paul Lucido.

 

And congrats to Aaron Nemec, who Guild Mortgage Co. has promoted to executive vice president and named him national retail manager, a new position created to support Guild’s growth plans. “Nemec will lead the company’s retail production, currently with more than 200 branch offices and satellites in 23 states. Previously, Nemec managed retail loan production for Guild’s Desert and Mountain region, its largest, with more than 60 locations in 11 states. The region accounted for some 40 percent of all Guild loan volume in 2013.”

 

There is a lot of rumors and chatter about M&A going on out there. Yes, it seems there is talk of Mutual of Omaha cutting off locks next week, but plenty of lenders are talking to other lenders. On the banking side, in Minnesota Grand Rapids State Bank ($225mm) will acquire Crow River State Bank ($84mm) for an undisclosed sum. Over in Texas Investor group Park Cities Financial Group will acquire Town North Bank ($593mm). Park Cities has been looking for a TX bank to buy since last year and is led by billionaire Darwin Deason. And Kansas-based Sunflower Financial, Inc. and Colorado-based First Western Financial, Inc. jointly announced the signing of a definitive agreement to merge.

 

Not everyone is growing. A Bank Director survey of directors and senior bank executives of banks across the country finds 50% of banks with assets > $5B plan to reduce branches vs. 28% for banks $1B to $5B, 6% for banks $500 million to $1B and 9% for banks that have less than $500 million.

 

Everything being equal, anyone who thinks residential lending is going to skyrocket in the autumn and winter is foolish. Are they hoping for rates to plummet, or a new HARP? (There, I said it, and expect to receive a lot of flak for it.) For practically everyone, loans per branch and LO are generally lower than where they were 6 or 12 months ago. If not – congratulations, you are in the minority. If the U.S. economy continues to muddle along, and nothing too dramatic happens overseas, rates will stay where they are or possibly creep up. LOs, who had low volumes on tight margins when 30-year rates were at 3.50% last year, and still in the business, may have a tough time when rates are at 4.50%. Hopefully (and hope is not a strategy) we’ll see some guarantee fee price help, or other loan-level price help, from the agencies. And although they don’t directly impact 30-year mortgage rates, overnight Fed Funds tend to influence longer term rates – and psychology. The FOMC is currently projecting the Federal funds rate will be between 1.25% to 1.50% in 2015 and 2.75% to 3.0% in 2016. There are companies seeing stable margins and volumes, but those are mostly the ones that have added branches and staff. But even senior management at those companies has contingency plans for what happens if the industry has another winter like the last one.

 

Lending to minorities is at a 14 year low, probably for a variety of reasons. Certainly FHA lending has taken it on the chin. Buyback risk and fear of future class action lawsuits are candidates. Many minorities are all cash buyers, and certainly tighter credit standards have impacted things. Industry observers suggest that lenders should expect some sort of response from the Administration, and fair lending enforcement is probably going to be stepped up.

 

“Do bigger loan files mean better loans?” The MBA’s Mortgage Banking magazine noted, “(a) 85% of all loan files contained 400-2,000 pages, (b) in 2010, only 3% of loan files had more than 800 pages, whereas 16% do today, (c) when looking at the number of loans with 500-900 pages, 52% of all conventional loans had them and 77% of VA loans had them.” Mr. Joe Garrett, banking consultant and fervent A’s fan, writes, “What’s really eye-catching is that the 10 biggest loan files in the study contained more than 6,000 pages and the largest, for a jumbo self-employed borrower, had over 8,000 pages. Rules and regulations have led to fatter files, but the two obvious questions are these: (1) Is the borrower more protected now from bad lenders and bad loans, and (2) are these loans going to perform better? Would anyone possibly answer yes to either question?”

 

Let’s see what some vendors have been up to lately!

 

It has now gotten simpler to collect digital bank statements almost instantly.  AccountChek and Encompass announced they are partnering to provide Encompass users an automated way to collect and verify account statements and VOD’s.  http://www.formfree.com/formfree-announces-integration-with-ellie-mae/.  Kevin Conlon, COO at Mason McDuffie Mortgage Corporation, stated “We are delighted to be using AccountChek, which provides a much needed technology solution to a previously outdated process. The AccountChek integration with Ellie Mae’s Encompass will allow us to ensure bank account authenticity and increase originations by automating the collection, verification and analysis of borrower accounts.”   Contact George Manolis at george@formfree.com.

 

Compass Analytics, LLC announced the release of its whole loan, MSR and agency best execution pricing and pipeline risk web services. “To date, pipeline risk, whole loan and MSR portfolio risk systems have worked off of batch processes of entire pipelines or portfolios.  With this new release, Compass’s analytics solution, CompassPoint™, will be available on a transactional basis and be callable from most applications across the internet.  Compass clients and their third party vendors will now be able to integrate and access CompassPoint™s library of pricing and risk functions such as MSR value, whole loan value, structured cash flow value, agency best execution pricing, rate sheet pricing, investor eligibility and fair market and gain/loss values, from within their own applications on a loan-level, on-demand basis.”

 

CoesterVMS has enhanced its Encompass integration to allow clients to use the cloud control system as a native application that can be built directly into its workflow and business rules. The interface is also open to CoesterVMS’ web services to allow appraisal data to transfer between its system and Encompass. “It’s a really solid interface and something that the industry has needed” stated David Marguilies, Executive Vice President, Director Global Sales at American Financial Resources/ELend. The next generation of integrations for LOS systems by service providers can be found at CoesterVMS.

 

Effective October 6, 2014, Arch Mortgage Insurance Company (Arch MI) is updating the rates for our Non-Refundable Single Premium Lender Paid Mortgage Insurance (LPMI) program, with the goal of enhancing our risk-based pricing. The changes include a new credit score tier for credit scores of 760+, and a further refined rate structure below 680. The new rates reflect lower pricing for high-quality loans, credit scores above 720, as well as some increases in the rates for credit scores below 660.

 

MGIC published new underwriting guideline effective October 1st. The new Underwriting Guide posted at www.mgic.com/newuwg, incorporates changes and updates for doing business with MGIC under its new Master Policy and has been reorganized into 3 sections for easier reference.

 

Altisource Portfolio Solutions S.A. (“Altisource” and NASDAQ: ASPS), a premier marketplace and transaction solutions provider for the real estate and mortgage industries, has launched Wholesale One, a new cooperative for the wholesale mortgage industry provide a platform for mortgage brokers, wholesale lenders and related vendors to provide quality loans to consumers nationwide.

 

Arch MI is removing two overlays entirely from its EZ Decisioning program: credit score and property flipping effective October 2nd.

 

National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc., announced that it has launched a new credit union mobile application (app) as well as a new website specifically for credit unions, cu.nationalmi.com. The mobile app enables users to run rate scenarios, view credit union-specific bulletins, and easily contact National MI personnel. National MI believes it is the first private mortgage insurer in the industry to create a credit union-specific app.

 

Comergence, a provider of third-party risk-management platforms for the mortgage industry, announces that it is now providing appraiser due diligence and screening services for eAMC, an appraisal management company based in Troy, Michigan.  Comergence offers a full suite of hands-on and automated services for screening and compliance monitoring.

 

Accurate Group is being named to Inc. Magazine’s 500/5000 fastest growing private companies in the United States list for the fourth year. Read the complete press release for details.

 

Yes, it is darned early – I am in Atlanta for a couple days. Things are pretty quiet out there anyway, and no one is complaining about rates. On Tuesday there was some movement among coupons, and types of agency MBS (Ginnie versus Fannie versus Freddie), but nothing major. It is a game of supply and demand that help to set mortgage rates, and the supply from originators remained rather mediocre as was echoed by the MBA’s application numbers for the previous week. For demand by the Federal Reserve, based on FedTrade operation results, purchases totaled $8.763 billion which equated to $1.75 billion per day.

 

But the big news came from New Home Sales which surged 18% in August to a 504,000 annualized pace, the strongest since May 2008. The one-month increase was the biggest since January 1992. And not helping those renters in the market, the median sales price of a new house climbed 8% from August 2013 to $275,600.

 

Today at 2:30AM HST we’ll have August’s Durable Goods (-17.9 expected) and Initial Claims (+300k), and later the government will auction off $29 billion of 7-year notes. In the early going the 10-yr T-note, which ended Wednesday at a yield of 2.57%, is sitting around 2.56% and agency MBS prices are little changed.

 

 

(Yes, supposedly this is a tall-tale, but what the heck?)

A lawyer purchased a box of very rare and expensive cigars and then insured them against, among other things, fire.

Within a month, having smoked his entire stockpile of these great cigars, the lawyer filed a claim against the insurance company.

In his claim, the lawyer stated the cigars were lost “in a series of small fires.”

The insurance company refused to pay, citing the obvious reason, that the man had consumed the cigars in the normal fashion.

The lawyer sued and WON!

(Stay with me.)

Delivering the ruling, the judge agreed with the insurance company that the claim was frivolous. The judge stated nevertheless, that the lawyer held a policy from the company, in which it had warranted that the cigars were insurable and also guaranteed that it would insure them against fire, without defining what is considered to be unacceptable ‘fire’ and was obligated to pay the claim.

Rather than endure lengthy and costly appeal process, the insurance company accepted the ruling and paid $15,000 to the lawyer for his loss of the cigars that perished in the “fires”.

NOW FOR THE BEST PART…

After the lawyer cashed the check, the insurance company had him arrested on 24 counts of ARSON!!! With his own insurance claim and testimony from the previous case being used against him, the lawyer was convicted of intentionally burning his insured property and was sentenced to 24 months in jail and a $24,000 fine.

 

 

Rob

 

(Copyright 2014 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)