Apr. 22: Retail, wholesale, and correspondent jobs; private MI biz attracting attention; press & regulators hit start-ups & FinTech lenders

What does $35 million get you in Austin, Texas? Here you go – I guess you can boost the price whenever someone mentions a “matriarch.”


In wholesale news EMM Wholesale is expanding its footprint in the Northeast & New England region and is hiring AEs in that region in addition to producing area sales managers, wholesale operations, underwriting, and processing personnel. EMM Wholesale is a division of E Mortgage Management, LLC, a privately held mortgage lender founded in 2003. “We are licensed in over 30 states and are an A+ rated, accredited member of the Better Business Bureau, member of the Mortgage Bankers Association and believe in maintaining the highest of compliance standards with the CFPB. E Mortgage Management is characterized by an energetic, creative staff paired with an in-house marketing agency and cutting edge technology and our underwriting and processing systems allow us to approve and process mortgages quickly without jeopardizing quality. We have cultivated a fun team environment where there is opportunity to learn, develop and advance your career while contributing to the company.”  For confidential consideration e-mail your resume to John Miriello, Vice President, Human Resources.


On the correspondent side of things Planet Home Lending, LLC’s Correspondent division welcomes Jim Shaler as Regional Sales Manager for the Southeast territory (North Carolina, South Carolina, Georgia, Alabama, Tennessee, Mississippi and Florida). Jim brings more than 20 years of Mortgage Banking experience to Planet. In addition, Planet continues to expand its presence in both Retail and Wholesale. Planet has several open positions including a Retail Operations Manager based out of its Dublin, California office, a Wholesale Regional Sales Manager in Texas and experienced Wholesale Account Executives in their Texas, Pacific Northwest and Northern California regions. “Planet Home Lending is a fast-growing, national residential mortgage lender and servicer with over $13 billion in servicing. The company is an approved Fannie Mae and Freddie Mac Seller/Servicer, full Ginnie Mae Issuer, and an approved FHA, VA, and USDA direct lender.  If interested in joining our dynamic and growing organization, please send an updated resume in confidence to Chase Gonzalez.”


The private mortgage business seems to have turned from a sleepy steady segment of the industry that regular helped lenders by sponsoring events into a regular source of news. We have UG for sale. Who is a natural buyer? Arch MI, out promoting its RateStar product, is going through changes in the upper & regional ranks of its sales staff. (In with the new, out with the old?) And now we have Essent entering into a three-year, $200 million revolving credit facility.


For Essent, “Borrowings under the Facility may be used for working capital and general corporate purposes, including, without limitation, capital contributions to Essent’s insurance and reinsurance subsidiaries. ‘This credit facility enhances our financial flexibility as we continue to grow our company,’ said Mark Casale, Chairman and CEO.


“Borrowings under the Facility will accrue interest at a floating rate tied to a standard short-term borrowing index, selected at the company’s option, plus an applicable margin. On the closing date, the minimum interest rate for any borrowings would have been 1-Month LIBOR plus 2.0%…J.P. Morgan and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as joint lead arrangers and joint book runners.”


MGIC Investment released earnings, missing some estimates although book value increased. Net premiums earned of $221.3 million, and it appears that it had an average premium margin of 50.7 basis points, down from a calculated 52.7 bp margin last quarter (the company reported a fairly stable average monthly premium and an increase in the average single premium QOQ). NIW of $8.3 billion was down from $9.8 billion in 4Q15 and down from $9.0 billion in 1Q15. Insurance in Force (IIF) increased Q/Q to $175.0 billion from $174.5 billion. Incurred losses came in at $85 million, down from $95.1 million last quarter and up from $81.8 million in 1Q15. Folks wonder about the likelihood and timing of future reserve releases – and a big driver of that is the falling default to claims rate. While the company expects this to go down from 12% in 1Q16 to a more normalized 10%, the timing remains uncertain because of the slow resolution of remaining pre-crisis loans.


(For those who love to pay attention to crunching the numbers, MGIC announced a change to the presentation of the information provided in the quarterly portfolio supplement, and re-stated the previous four quarters according to the new presentation. The company provided fewer operating metrics for flow business and separated the presentation of certain flow business metrics from for bulk business metrics. The changed flow business metrics include the stratification of risk in force (RIF) by FICO, the average paid claim, and the average coverage ratio. Regarding the change to the presentation of primary RIF, MTG has increased the number of buckets for > 660 loans, and decreased the number of buckets for < 620 loans. Previously there was one category for > 620 FICO loans, and three categories for < 620 FICO loans, and now, there will be one category for < 659 FICO loans and three categories for > 660 FICO loans.)


And all private mortgage insurance companies are following the April 14th Federal Housing Finance Agency (FHFA) news that the GSEs would offer principal reduction on certain delinquent, underwater mortgages – thought to be about 33,000.


Amy DeBone with Compass Point Research and Trading writes, “The targeted extension of the existing streamlined modification program will have a positive impact on mortgage insurer’s with delinquent loans that qualify through a potential increase in delinquent loan cures…While principal forgiveness will not impact the amount of the claim payment in a re-default scenario, delinquent loan cures reduce the minimum required asset amount under PMIERs, and have no impact on the available asset amount. Therefore, the potential for an increase in the cure rate would free up capital.”


Turning to industry-wide trends, non-bank lenders continue to grab market share from the banks. And, as a segment of the non-bank lending community, start-ups and FinTech companies are under scrutiny. CFPB director Cordray said he does not believe it is appropriate for financial technology startups such as marketplace lenders and others to gain an advantage “because they are arbitraging the regulatory system and do not take seriously what the banks and regulated institutions have to do”. He said such firms should be treated the same way as financial institutions.


And here’s an article that answers the question, “So why can’t startups disrupt the mortgage industry?” I can see some defective reasoning in the article (thank you to Steve A. for sending) but it does bring up some very interesting points.


You can always tell if something is popular today by whether or not it has an acronym associated with it. Peer-to-peer lending, or P2P, is definitely hot….or “trending” as some would say….so much so, in fact, regulatory attention could be viewed as a coming of age for the platform. While garnering the attention of a regulatory bureau is one thing, being included in comments about overvaluation methods, unicorns, and enforcement actions is another. But that is exactly what SEC Chairwoman Mary Jo White did recently when she came to California’s Silicon Valley to warn technology companies and investors to be wary of unicorns. While the unicorn reference was targeted at start-up company valuations, Chairwoman White said the agency is closely monitoring how loans arranged by online marketplace companies are packaged and sold to investors. Investors who purchase bonds backed by these loans should receive adequate disclosures about the platform’s lending models and who the borrowers are. Jesse Hamilton of Bloomberg writes, “So-called peer-to-peer lenders use online platforms to directly connect borrowers with lenders, often at cheaper rates than those available at banks and offering better returns. The higher yields have drawn interest from Wall Street, with asset managers, hedge funds, and banks buying or bundling the loans into bonds that can be sold to investors. As the market has grown, so have concerns over early signs of deterioration and questions about whether they are riskier than more traditional forms of credit.” The SEC is working with agencies including the Treasury Department, Federal Reserve and Consumer Financial Protection Bureau to better understand the marketplace lending industry


This week Citigroup said it will no longer buy loans from the Prosper Marketplace platform and repackage them into securities. Marcus Lam, in Secondary Marketing for California’s Opes Advisors, Inc., writes regarding Prosper, “It turns out unsecured loans have higher charge-offs. ‘Prosper is learning lessons this year as it works with Wall Street firms creating bonds, its president, Ron Suber, told an industry conference in San Francisco on Monday. “When we don’t have alignment with our investors, when groups sell our loans into the market no matter what, if the market’s not ready, it’s not good,” he said.’”


Yesterday the industry learned that a judge gave a preliminary approval to $2.5 million settlement of FCRA, California claims against SoFi to resolve claims that SoFi misrepresented credit inquiries. Bloomberg reported that, “San Francisco-based Social Finance Inc. and its SoFi lending unit have moved to settle class claims that they misrepresented credit inquiries about potential borrowers (Heaton v. Social Finance Inc., N.D. Cal., No. 14-cv-05191, preliminary approval 4/20/16)…They said SoFi violated the Fair Credit Reporting Act and California law by saying it would only make soft credit pulls — inquiries about a consumer’s credit history that don’t affect the consumer’s credit score. Instead, the plaintiffs alleged, SoFi did both soft and hard credit pulls, which do affect credit scores. In the proposed settlement, SoFi denied the claims but said it has agreed to settle to avoid further litigation.


LendingClub Corp., another marketplace lender, is facing separate claims in a putative class suit filed in New York this month. That case, which alleges violations of New York usury laws, is still in the early stage. LendingClub is scheduled to file a response April 27. Remember that back in February LendingClub said it will keep an interest in loans it disburses in order to reassure investors because of legal questions based on a petition now before the U.S. Supreme Court. Investors are keenly interested in the New York case since their perception of LendingClub and the industry in general could change.


Switching gears to interest rates, once again, by the time the proverbial dust settled Thursday, they hadn’t moved much from where they began the day – worse a shade. The Treasury market opened slightly higher overnight but would trade heavy throughout London opening the NY session in the red “led by the long end.” Fixed-income securities were choppy during the morning but eventually settled down. At the close the 10-year note was worse about .125 to yield 1.87 but agency MBS prices closed worse less than .125.


Don’t look for much volatility today. The big news was out of Japan where media reports talk about the BOJ lowering rates on its bank lending facilities into negative territory (i.e. banks would be paid to borrow) – that hit the yen and bolstered Japanese equity sentiment. There is only a “third tier” release at 9:45AM EDT when Markit releases its Manufacturing PMI. In the early going on the spring Friday the 10-year is sitting around unchanged at 1.87% and agency MBS prices are roughly unchanged.



(Thanks to Stephen S. for this one.)

“Wake up, honey. It’s time to go to school.”

“But why? I don’t want to go to school.”

“Give me two reasons why you don’t want to go to school.”

“One, all the children hate me. Two, all the teachers hate me.”

“Oh, that’s no reason. Come on, you have to go to school.”

“Give me two good reasons why I should go to school?”

“One, you are fifty-two years old. Two, you are the principal!”





(Copyright 2016 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.)

Rob Chrisman