"Rob,
folks wonder about Realtors charging 5-6% commissions,
regardless of transaction amount, whether that is fair, and
whether or not the National Association of Realtors has any
clout. I found this site showing NAR's lobbying efforts -
apparently it was #3 in total dollars spent in 2011: http://www.opensecrets.org/lobby/top.php?showYear 11&indexTypes.
This is more than ‘big oil,’ more than ‘big pharma,’ and more
than military/aerospace." (A look at this year's, assuming
these figures are correct, shows the NAR is #2.)
Working
with Realtors is something lenders do, and many of those
lenders are hiring. In Southern Florida, Home Financing
Center is searching for a Chief Financial Officer, and
Quality Control and Compliance Officer, and Operations
Manager, and underwriters. (Talk about growing!) HFC is
the largest privately owned mortgage company in South Florida,
is #5 in market share in Miami-Dade County, and is growing.
Home Financing Center is also looking for personnel who are
experienced with Ginnie Mae Secondary or Ginnie Mae Servicing.
For more information on the company visit http://www.homefinancingcenter.com/home.aspx,
and resumes should be directed to opportunites@homefinancingcenter.com.
And
up the Atlantic Coast in Maryland, American Bank is
currently seeking talented leaders to develop our Mortgage
Branch lending network in the Mid Atlantic area.
American is a federally chartered community bank in Maryland,
and the mortgage division has been a vital component of the
bank for over 15 years and is well positioned to grow in the
marketplace. Regional Managers will be directly responsible
for the sales and processing activities of the branch, and
specific areas of responsibility include sales leadership,
recruiting, mentoring, motivating, strategy development and
execution, marketing, process management, and compliance. The
Regional Manager is expected to be a presence in the
community; building B2B networks, engaged in community events,
and building the company brand. The requirements for
interested candidates include 5+ years of successful outside
retail mortgage origination experience in the current lending
environment, a track record of recruiting, and managing a
dynamic sales force of 12+ team members, and extensive
understanding of mortgage lending, including FNMA, FHLMC, FHA,
& VA products and guidelines. For serious inquiries only,
please forward your resume to the Group Vice President of the
Bank, Mike Baynes at mbaynes@americanfsb.com.
Just
because you're the biggest doesn't mean you don't have
problems. Wells Fargo announced that it could lose $2.6
billion in addition to the reserves it has already set
aside for investor requests to buy back soured mortgage loans,
a 13 percent increase from three months ago. Wells is the #1
lender, but "only" the fourth-largest U.S. bank. It had
previously said that it increased its reserves in the second
quarter for so-called repurchase requests because of rising
demands from Fannie Mae and Freddie Mac for losses tied to
loans made from 2006 to 2008. At the end of June, the bank had
total reserves for repurchase requests of $1.8 billion, up
from $1.4 billion at the end of March. The estimate of
possible losses on top of those reserves is "reasonably
possible" but does not represent a "probable loss," the bank
said in its quarterly filing, reports Reuters. As we know,
Fannie and Freddie publicly say that they are trying to
diminish losses for U.S. taxpayers. Bank of America (#2 bank)
has set aside $15.9 billion in reserves for repurchase
requests and has said it could lose an additional $5 billion.
But
let us talk about those agencies – hats off to them! Freddie
Mac announced that it will not require any infusion of cash
from the U.S. Treasury following its profitable second
quarter. The company will also pay $1.8 billion to the
Treasury as a dividend on the 10% senior preferred stock the
department holds. During fiscal 2012 (to date) Freddie Mac has
paid $3.6 billion in dividends while drawing $0.02 billion in
financial support from the government. In FY2011 it paid $6.5
billion and drew $7.6 billion. Since it was placed in federal
conservatorship in August 2008 the net draw has been $52.2
billion. The results were good – are they enough to discourage
too much meddling from politicians about its fate? Freddie
reported net interest income during the quarter of $4.4
billion, a decrease in provisions for credit and derivative
losses, and overall net income for the second quarter of $3.0
billion compared to $577 million one year earlier and
comprehensive income of $2.9 billion compared to $1.8 billion.
Harp 2.0 refinancing through Freddie Mac has reached over
200,000 borrowers this year – over one-quarter of the total
number of HARP refinancings since the program began in 2009: http://in.reuters.com/article/2012/08/07/mgic-freddiemac-idINL4E8J632Y20120807.
And
this morning Fannie Mae reported a net income of $5.1
billion for the 2nd quarter of 2012. This
compares very well to the loss of $2.89 billion last year. Net
revenues for the 2012 second quarter rose to $5.82 billion
from $5.24 billion in the comparable period in 2011.
Much
has been made of the “record-low” interest rates have hit and
how conducive an environment it is to refinancing.Refinancing through
the revised Home Affordable Refinancing Program (HARP 2.0)
grew to a 33% share of all Fannie Mae and Freddie Mac
refinancing in June, surging from the 20% share the
program posted in April. And the proportion of those
refinancings with very high loan to value (LTV) ratios also
increased significantly. It appears that the changes made
early this year to the HARP program (removing the 125 percent
LTV ceiling, reducing and/or eliminating some fees, and easing
lender risk) have worked.During
June Freddie and Fannie refinanced a total of 382,539 loans,
and of those over 125,000 were HARP loans. While the HARP
loans were fairly evenly divided between F&F, Freddie Mac
did less refinancing overall and slightly more HARP loans so
had a much higher share of those loans, 44% compared to 26% at
Fannie Mae.
The
total of HARP 2.0 loans written in the first six months of
this year was 422,969, surpassing the 400,024 written during
all of 2011.Since the
program was originated in April 2009 1,444,820 borrowers have
refinanced through the program. But this is not evenly
distributed across the U.S. The proportion of loans refinanced
through HARP was double the national average in Nevada,
Arizona, and Florida. HARP refinances represented
two-thirds of GSE refinancing in those states, and in those
three states borrowers with LTVs greater than 105 percent
represented more than 80 percent of HARP volume compared to 62
percent nationally.
For
borrowers with loans under $85,000, however, the amount they
could save tends not to be worth the trouble of going through
the refinancing process, which these days can be just as much
of an effort as obtaining an original loan.Such loans are enormously
attractive to investors, who at the moment are fretting about
the high prices of government-backed securities.Owing to the expansion of
various government programs as well as historically low loan
rates, bonds guaranteed by Fannie, Freddie, and Ginnie are
averaging 108.65 cents on the dollar, the highest since 1986.This is also due to the
extra costs investors incur for particular bonds above prices
in trading where there’s a degree of uncertainty as to
precisely which securities they’re buying.With the risk and high
prices associated with government-backed bonds, investors are
willing to pay premium prices for bonds that are the least
likely to prepay quickly.
Rock-bottom
rates do not a refinancing boom make, necessarily.The number of refinancing
applications, 57% higher than the low recorded this last
March, did hit a three-year high earlier this month, but the
pace remains 46% below a 2003 peak.Many bond buyers believe
that any refinancing boom activity will be hindered by,
amongst other issues, the increasing limitations placed on
lenders that restrict their overall capacity and consumers’
misgivings about what they perceive to be as a lengthy and
difficult process.With
regards to the latter, many homeowners are under the
impression that they can’t qualify due to depressed housing
prices and increased demands for paperwork and verification.Most low-balance loan
holders don’t realize the variety of options available,
however, and mortgage-bond investors aren’t hesitating to pay
the protection costs associated with the securities comprised
of such loans because of the fact that they’re less likely to
be refinanced.
Investors
seem to be of the consensus that the use of HARP may be
nearing its zenith, and consequently pay-ups on the types of
highest-rate bonds that provide a guarantee against borrowers’
use of the program aren’t gaining as much as predicted.For a while the
assumption was that low-balance borrowers with the lowest
rates, who presumably had taken out their mortgages fairly
recently, wouldn’t be as likely to refinance in the immediate
future.Rates,
however, have continued to fall, meaning that such borrowers
being slow to prepay are no longer a sure thing.
Tuesday
was not a good day for rates, although it was hard for anyone
to put their finger on why. The $32 billion 3-yr auction will
be mopped up by maturing 3-yr and 10-yr issues totaling over
$54 billion – so there is more than enough cash chasing
yesterday’s auction and this week's supply. The supply of
agency MBS’s has been averaging $1.5-2 billion a day, which
matches the Fed buying, and any leftovers are mopped up (yes,
I used that term twice) by REIT’s and money managers. Although
the mopping helped mortgage prices relative to Treasury
prices, it didn’t help the entire market, so MBS prices were
worse by about .250 but the T-note was worse by about .625 and
closed at 1.63%.
For
a little European excitement, let’s turn to Greece. (I guess
that’s better than turning away from Greece.) Faced with a 3.2
billion euro European Central Bank bond maturity on 20 August,
Greece plans to avert default by issuing additional treasury
bills - details will be announced Friday. We’ll be watching,
since the tactic is needed because the next round of rescue
money from international lenders has been delayed.
Here
in the U.S. today we had/we’ll have the MBA's mortgage
application numbers for last week, Productivity/Unit Labor
Costs, and the Treasury’s auction of $24 billion in 10-year
notes at 1PM EST. Last week’s residential apps dropped almost
2%, but refi’s still account for 81% of total volume. And
ARM’s are still an afterthought at 4% of overall volume.
The
first reading for Q2 Productivity is projected at +1.3% (came
in at +1.6%) from -0.9% in Q1, while ULC are seen at +0.6%
(actually +1.7%) from +1.3%. In the early going we find
the 10-yr at 1.62% and MBS prices nearly unchanged.
A duck walks into a hardware store and asks the guy behind the
counter, “Do you have any duck food?”
“No.”
replies the clerk, “this is a hardware store and we do have
any duck food.”
The next day the duck goes into the hardware store again and
asks the guy behind the counter, “Do you have any duck food?”
"No," replies the clerk, “This is a hardware store; we do have
any duck food. I told you that yesterday!"
Next day the duck go into the hardware store again! It asks
the guy behind the counter, “Do you have any duck food?”
No replies the clerk, “This is a hardware store, we do have
any duck food. I told you that several times now, you dumb
duck, and if you come in again I will nail your feet to the
floor!!!"
Next day the duck go’s into the hardware store again! It asks
the guy behind the counter, “Do you any hammers sir” the guys
say, "No, sorry, we are fresh out of hammers."
"Well than can I have some duck food?!"
If
you're interested, visit my twice-a-month blog at the STRATMOR
Group web site located at www.stratmorgroup.com.
The current blog discusses the FinCen, SAR’s, and the impact
on mortgage lenders. If you have both the time and
inclination, make a comment on what I have written, or on
other comments so that folks can learn what's going on out
there from the other readers.
