May 4: Retail jobs & new wholesaler, outsourcing QC; Fannie & Freddie news & preventing fraud; MI earnings

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...

By now the remains of the pizza lunches for everyone working OT to deliver a successful April have been cleared away, and lenders are optimistic about May – especially those who have remained loyal to pursuing the purchase business. And due to rent costs plenty of renters will be thinking about buying. A recent “MBA’s Chart of the Week” identifies the top 5 single-family rental owners and the top 50 apartment owners, with Hunt Companies, Inc. ranking first on the list, followed by Boston Capital, AIG Affordable Housing, PNC Real Estate and Boston Financial Investment Management. I know the stats are from two years ago, but over 14 million single-family homes in the US were renter-occupied in 2013, representing 12 percent of the entire U.S. housing stock and more than one-third of rental housing shares.

 

In the job’s scene Paramount Residential Mortgage Group, Inc. is actively looking to hire a Regional Operations Manager to work out of its Orange County Regional Office located in Southern California. In addition, PRMG is adding to its loan officer ranks and is searching for LOs in its 9 new retail branches in the West, Midwest, Northeast, Southeast and New England territories. Contact HR@prmg.net for a complete job description or confidential inquiries. “PRMG continues to grow organically and has nearly 1000 employees nationwide and is licensed in 47 states with nearly 50 branches located throughout the country!  Isn’t it time that you took a good look at PRMG?

 

On the wholesale side Blustream Lending, led by the former GreenPoint Mortgage management team, is a new wholesale lender located in the San Francisco Bay Area and is now accepting business from approved mortgage brokers in California, Washington and Oregon. “Backed by industry veterans, Blustream offers a fresh approach with a low cost to originate model and zero legacy issues.  If you are interested in partnering with Blustream Lending, please call us at 888-415-1620, email our team at sales@blustream.com, or visit Blustream.  Blustream is also expanding its underwriting and processing team offering a strong compensation package with stock options. To learn more please visit NexeraHolding. Blustream Lending is a division of Nexera Holding LLC.”

 

Pinnacle Capital Mortgage is proud to announce the addition of industry veteran, Dave Bergstrom who will be opening a new Southern California regional production center. This center will serve the Southern California area with top producing mortgage advisors and in-house underwriting, processing, document drawing, and marketing. Dave Bergstrom, Regional Vice President states “Our Core Values of Teamwork, Empowerment, Positivity, and Excellence will continue to attract the greatest in the business as we grow out our new center and expand our retail lending presence. We’re anticipating a great response from our clients as we help them with one of the most important decisions of their lives in supporting home ownership.” According to SVP, Dave Striplin, “Joining Pinnacle Capital Mortgage signals his belief in us as an industry leader in operational expertise and company strength. Given his impressive background and proven success in the mortgage industry, this is a significant development for our company.”

 

Turning to agency and QC news…

 

A recent trend found in Fannie MORA exams is that there’s a huge internal audit deficiency in the market for mortgage companies. The challenge arises in that most mortgage companies don’t have the resources, expertise, or time to set up an ongoing internal audit program.  With more than 300 lender/servicer/vendor audits in the last two years, MQMR provides companies with a fully outsourced program supported by a team of experts in operations, QC, servicing, and compliance.  MQMR’s internal audit program begins with an initial risk assessment, followed by a customized audit plan, and ongoing testing.  For more information, contact Casey Hughes or look for MQMR at the Chicago LIRC and NY Secondary conferences.

 

The FHA has extended the effective date for the policies contained within its new Single-Family Housing Policy Handbook from June 15 to September 14. FHA said it granted the extension to give lenders more time to operationalize and become fully compliant. “FHA recognizes that there currently are a number of competing initiatives occurring simultaneously in the mortgage industry that may be challenging mortgagee and other industry partner resources,” FHA said. “For this reason, FHA is extending the SF Handbook effective date by 90 days with the expectation that this additional time will enable mortgagees and others to be fully compliant with the new effective date.”

 

Freddie Mac’s Quality Control team has posted its latest QC TipCast. This one hones in on post-funding QC practices and the potential wins for sellers.

 

Freddie Mac sent out a note on fraud prevention. “The mortgage industry has spent the last several years focused on building itself back up and instituting best practices to fight fraud. It’s almost human nature to let down your guard and not focus on fraud prevention tactics when things are going well. But that’s precisely the time when you should keep your eyes out and ears open. Instances of some types of fraud, such as appraisal fraud, appear to have decreased. But others, such as the number of falsified loan applications – now the most common type of mortgage fraud – have risen steadily for the last three years, according to The New York Times.

 

“While no single fraud scheme is splashed across the news headlines right now, our industry is tested everyday by loan-level challenges. A borrower who’s unemployed at the time of closing obtains a loan because a lender skips verbal verification prior to closing. A lender misses a mortgage or other debt listed on a credit report, which was not disclosed on the loan application. A borrower misrepresents his assets and promises down payment money he doesn’t have in order to secure his loan. It’s worth noting that, as the industry evolves, so do fraud trends.

Loan by loan, the costs for loans that don’t perform well add up. Additionally, fraudsters use loan-level frauds to test our controls and as building blocks for larger, potentially more damaging fraud schemes.

 

“What can you and your organization do to prevent and report fraud? One step is to refresh your knowledge of best practices by reading our comprehensive Single-Family mortgage fraud mitigation best practices document. The Freddie Mac Financial Fraud Investigation Unit (FFIU) recently updated these fraud best practices to help you spot what to look for, how to report fraud or suspected fraud to Freddie Mac, and what steps you can take to help prevent fraud.

Freddie Mac’s SVP and Head of Single-Family Sales & Relationship Management Christina Boyle recently wrote about The 4 Cs of Qualifying for a Mortgage, including capacity, capital, collateral, and credit. Your attentiveness helps ensure that there isn’t a 5th C – Crime.”

 

Unfortunately since the beginning of time shady people have tried to separate honest people from their money. These people certainly aren’t confined to the mortgage industry, but the press that the public reads is still filled with stories on this topic. The latest is a HAMP spinoff that kept borrower monies – fortunately it appears to have been shut down by the FTC. And yes, so far rumors of the CFPB swallowing the FTC and doing away with it are only rumors and conjecture.

 

And what’s this? An attorney in Las Vegas disbarred for creating straw buyers and helping mortgage fraud? Good.

 

Keeping on with agency chatter…

 

The Federal Housing Finance Agency just released the results of the annual stress tests for Fannie Mae and Freddie Mac. Under the severely adverse economic scenario, the companies would need $157.3 billion in capital. Before you jump to the conclusion that this number is too high (or too low), let’s put this in context. Fannie Mae has $3.25 trillion in assets and Freddie Mac has $1.95 trillion in assets. That’s $5.2 trillion combined. As a percentage of the total, the $157.3 billion is 3.0%. This comes on the heels of another interesting story of a leaked Treasury memo. These two things tie together quite nicely actually. The Treasury memo says that a private Fannie and Freddie would need capitalization of 3% to 4% of assets. So, this recent stress test actually confirms that the ratios found in the memo are correct.”

 

Fannie Mae and Freddie Mac remain in conservatorship despite discussions to make changes, write Mark Calabria, director of financial regulation studies at the Cato Institute, and Alex Pollock, resident fellow at the American Enterprise Institute. Practical steps, including ending all the special privileges the mortgage giants enjoy, need to be taken, and then they could be allowed out of conservatorship to operate in an acceptable manner, according to the authors. The Hill/Congress Blog (4/27)

 

And as we enter the buying season, most lenders expect to benefit from the GSE 97% LTV products and the FHA mortgage insurance premium reduction. Approximately two out of three lenders surveyed expect that the GSEs’ 97% LTV products and the FHA’s MIP reduction will somewhat increase mortgage originations, while one-third of lenders surveyed do not expect those offerings to impact mortgage origination, according to results from Fannie Mae’s latest quarterly Mortgage Lender Sentiment Survey™. To learn more about the findings, read our latest FM Commentary or visit the Fannie Mae Mortgage Lender Sentiment Survey page.

 

The Designated Custodian Master Custodial Agreement (Fannie Mae Form 2010) is now available on Fannie Mae’s website in an electronic format, Form 2010 makes it possible to complete it electronically. However, all signatures must still be provided in ink. Once the Form is completed and signed, it can be scanned and emailed to BNYMellon, as detailed in the updated Instructions (located on the final page of the Form).

 

What are the MI company earnings up to?

 

MGIC’s first quarter earnings reached a net income of $133.1 million, compared to $60 million in the prior-year quarter due to diluted net income per share rising to $0.32 from $0.15 for the same quarter a year earlier. Total revenues for the first quarter totaled $270.2 million and net premiums written were $234.5 million. The total revenues in the first quarter included $26.3 million of net realized gains compared to $0.2 million of net realized losses in the same period a year earlier.

 

Genworth Financial reported a net income of $154 million for the first quarter of 2015, down from $184 million in the first quarter of 2014. Net operating income for the first quarter was $156 million, compared to $194 million in the same quarter a year earlier. The company estimated $500 to $700 million of additional capital to be fully compliant with the final Private Mortgage Insurer Eligibility Requirements.

 

Essent has not published first quarter earnings; conference call is scheduled for May 8th

 

Arch Capital Group reported net income for the first quarter of 2015 at $277.9 million compared to $177 million a year earlier. Net premiums written reached $542,003 million a slight decline from $545,602 million in the prior-year quarter. The difference in net premiums is a result of reductions in professional lines, energy and marine and program business, partially offset by growth in alternative markets and surplus casualty business.

 

Radian’s first quarter net income reached $91.7 million, which included net gains on investments and other financial instruments of $16.8 million, compared to $146 million in the prior-year quarter. New mortgage insurance written totaled $9.4 billion for the quarter a slight drop from $10 billion in the fourth quarter of 2014. The mortgage insurance provision for losses was $45.9 million in quarter one, compared to $83.6 million in the same period a year earlier.

 

And how ‘bout dem bond markets?

 

Yes, rates have crept higher. Is this the long-awaited move toward higher rates? Will it prove anyone that predicted lower rates wrong? No one knows for sure, but the move has certainly knocked some borrowers off the proverbial fence and they have locked in their refinance rate. And with the fabled home buying season ahead LOs continue to make the pitch that rates are still pretty darned good.

 

Turning to the bond markets, this is a pretty important week for job news – not housing news. Sure, last week we had the Fed news, but this week is chock full of potentially market moving announcements. We jump in head first this morning with some ISM numbers and Factory Orders. Tomorrow are the Trade Balance figures and more ISM (Institute of Supply Management) numbers, and then on Wednesday are the ADP Employment Change stats, Nonfarm Productivity, and Unit Labor Costs. Thursday brings us Challenger Job Cut stats and Initial Jobless Claims. And then we wrap up with Friday’s series of jobs data including the Unemployment Rate, change in Nonfarm Payroll, Labor Force Participation Rate, and Hourly Earnings.

 

For those quantitatively inclined we closed out the 10-year at 2.12% and this morning we’re still there with agency current coupon prices – those that secondary marketing folks use to set rate sheets – are unchanged as well.

 

 

Speaking of that, the MBA’s Secondary Marketing Conference is coming up in a few weeks and I trust I will see many of my compatriots roaming the halls. But there is no truth to the rumor that this is the initiation ritual for incoming capital markets employees. (How the heck does one practice wingsuit rides?)

 

 

Rob

 

(Copyright 2015 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.)