Jul. 18, 2011: Capital Markets & Ops jobs; CFPB nominee coming; bill to extend loan limits; Freddie & Fannie updates
Rob Chrisman

"Texting is like intellectually roaming free in a cul-de-sac." Feel free to quote Ralph Nader on that one.
 
Five-time Jeopardy winner Rich Cordray will be nominated tomorrow by President Barack Obama to lead the Consumer Financial Protection Bureau. He is the former Ohio Attorney General (he lost his bid for re-election last November), and currently the assistant director for enforcement at the bureau. And to round things out, he was a onetime law clerk to the U.S. Supreme Court; he has personally argued seven cases before the high court, according to his official biography.
 
A friend once told me, "All I ask is a chance to prove that money can't make me happy." True. Some people put their money into "risk free" US Treasury securities, which are, due to their assumed safety & virtual no chance of default, are used as base line for traders. Other fixed income securities are often traded as a spread over the risk free rate, i.e., Treasuries (hence the term "benchmark" 10-yr). But what if there was a chance that investors would not receive their interest payment? Last week Moody’s placed the US on a negative credit watch thanks to the lack of political progress towards a deal (as it promised it would) and S&P followed suit, raising the odds for a downgrade. The government, and the press, certainly spends enough time jawboning about it – it would make more sense to have them work on the deficit, or go pave some roads, than focusing on this artificial limit that has been raised ten times in ten years.
 
Over in Europe, the news is slightly better. European bank stress test results showed that only 8 out of 90 banks failed the stress tests and need to raise about 2 billion euros. Spain had the largest amount fail with five, Greece had two, and Austria had one. All UK and French banks passed. Analysts believe that the German and French banks that hold Greek debt will fail stress tests once select Greek bonds default. If these governments can pass austerity measures, why can’t ours?
 
I have been retained by a national bank that is searching for a Director of Capital Markets. The bank is looking for someone who either lives in the Midwest or West, or is willing to relocate. The candidate will be responsible for hedging and managing the rate risk of the bank, negotiating and managing master commitments with investors, maintaining business relations with investors, understanding and setting loan pricing, and assisting in the product development efforts of the company. Please feel free to pass this on if you know someone who’d be interested as it is a very good opportunity to join a national bank with a seasoned management team.  Please send questions or resumes to me at rchrisman@robchrisman.com.

Out in "Cali," in San Francisco, Parkside Lending is looking for a Post-Closing QC Manager/Head of 3rd Party Risk to join its team. The company focuses primarily on A-paper conforming and non-conforming loans. The right person (relocation available) will supervise a team of 5 including the broker relations coordinator, staff appraisers, post-closing underwriter and a post-closing analyst, stay current with state and federal licensing requirements including DRE, DOC and NMLS, review new broker packages, ensure that the broker agreement has been fully completed with no modifications, ensure that all loan officers, brokers and corporate officers are approved and in good standing with all of the applicable state licensing agencies, and so on. The ideal candidate should have at least 7 years of Post-Closing QC experience, a minimum of 5 years of supervisory experience, etc. If you know of anyone, or want more details, contact Matt Ostrander (CEO) at matt@parksidelending.com.
 
The possibility of extending loan limits is back in the news. Two Representatives introduced a bill Friday that would extend the current conforming loan limit for government-backed mortgages for another two years. Watch for any progress on The Conforming Loan Limits Extension Act, or H.R. 2508. Legislators will weigh a recent report from the National Association of Home Builders that showed 17 million homes would be impacted by the loan amount changes versus thinking that removing the temporary loan limits is a good first step toward the private market (including investors and insurers) taking the place of the government.
 
The FDIC was busy Friday. Through the FDIC’s usual mechanisms, in Florida First Peoples Bank was closed and Premier American Bank, National Association, in Miami assumed its deposits. In Georgia Ameris Bank acquired the banking operations, including all the deposits, of High Trust Bank and One Georgia Bank. And out in Arizona Summit Bank was closed and The Foothills Bank of Yuma assumed its deposits.
 
In the mortgage biz you can’t have a week go by without a lawsuit. One of the latest, major suits involves European financial group Dexia SA suing Deutsche Bank AG for losses on $1 billion of bonds that it bought from it, which Dexia says DB simultaneously bet against home loans backing the securities. According to the suit DB concealed that it packaged bonds from mortgages it privately disparaged as "pigs" and "crap," and then placed a $10 billion bet that those mortgages would fail. "We intend to vigorously defend ourselves against this suit and believe it is without merit."
 
In other corporate mortgage-related news, Citigroup posted stronger-than-expected 2^nd quarter earnings at $3.3B, up 22% from year ago levels. Lower trading revenues and US loan growth caused revenues to fall 7%. Despite the decline, gains in the international consumer division and lower loan loss provisions boosted the bottom line.

Last week I noted that letter from a reader saying, "In Phoenix for the month of June we recorded the highest number of sales EVER, our market is on fire!  Almost 12k sales with less than 25k active listings puts us around 2 months’ supply at this absorption rate, though with the summer heat sales are likely to drop to 9-10k in the coming months which is still very high…” I received some alternative views of this. “My broker states the following: 43% of those sales were cash, and that 80% of them were under 200,000." Another wrote, “You need to ask what the price point is in Phoenix. The multiple offers are on the $100k to $200k price points. There is a good amount of shadow inventory in Arizona, and I think there are a lot of people who are upside down but because their ARM’s have adjusted down and they are sitting tight.  So my fear is when rates start trending up we will see a rash of strategic defaults.”
 
For agency news, Freddie Mac spread the word to its servicers on requirements for “Servicer participation in HUD’s Emergency Homeowners’ Loan Program (EHLP). Interested parties should visit http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1112.pdf.
 
Over at Fannie, don’t forget that, “Lenders must provide Fannie Mae with all Housing Goals specific data items for every loan we purchase so that we can measure our success in meeting our regulatory Housing Goals. Our regulator uses this information to determine if we are satisfying its requirements to provide affordable housing to low-income borrowers and those living in low-income areas.” https://www.efanniemae.com/sf/refmaterials/hsgoaldata/
 
And we have about a month to go before DU 8.3 is rolled out. Changes include adjustments to DU’s Credit Risk Assessment (more conservative), maximum allowable DTI ratio (more restrictive), High-balance Mortgage Loan Limits (temporary limits being reduced / eliminated), updates to the online loan application, and update to the DU underwriting findings report, and so on. Go to https://www.efanniemae.com/sf/guides/duguides/pdf/current/rndodu83.pdf.
 
In spite of all the stuff going on with our government, and in Europe (or maybe because of it!), rates continue to be low. Friday the bond and mortgage markets followed equity markets most of the day. MBS prices traded better after the University of Michigan sentiment index was reported which came in at its lowest level since March 2009 and posted the largest one-month decline since July 2010. June’s Industrial Production came in at +0.2% versus a revised -0.1% in May and Capacity Utilization came in at 76.7% versus the same for May. Analysts were expecting a slight rise to 76.8%.
 
Overall though, the current environment of high political uncertainty, in both the US and Europe, is particularly challenging for investors, as these political risks are surely among the hardest to forecast. This climate of uncertainty is conducive to more volatile bond markets, whether it is overnight or intraday. For scheduled news this week, Housing Starts will be released on Tuesday. Existing Home Sales and mortgage applications will come out on Wednesday. Jobless Claims, Leading Indicators Philly Fed, and a whole ‘nother housing index will be released on Thursday. We'll have yet another housing market index today, although tomorrow we have Starts and Permits. This morning we find the 10-yr down to 2.88% and MBS prices slightly better.
 

How to tell if you need to pray at work?
If you have ever thought about choking, poisoning, punching or slapping someone you work with, you need to pray at work.
When you hear a coworker call your name and the first thing that crosses your mind is, "What the ---- does she want now?" and you try to hide, you need to pray at work.
When someone comes in and announces, "Office meeting in 5 minutes," and you think, "What the ---- do they want now?" you need to pray at work.
When you finally take some vacation time and you come back only to find a mountain of paperwork sitting on your desk because no one else would do it and you think, " Sorry --- ------ ------" you need to pray at work.
You avoid saying more than "Hello" to someone at work because you know it’s going to lead to their whole ------- life story, you need to pray at work.
When a coworker comes in a little too happy singing "good morning!" to everyone and you think, "Someone needs to slap the ---- out of her!" you need to pray at work.
When you're in the elevator and it stops to pick up someone who stood for 5 minutes waiting for the darned thing only to go down 1 floor, and you say, "That lazy -----." you need to pray at work.
And if you know all the ---- words in this, you need to pray at work.
 

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