Oct. 3, 2012: Mortgage jobs; Flagstar's leadership change; big lawsuits & settlements; private MI news; lock desks busy!
Rob Chrisman
There
are some stirrings out there that are raising some eyebrows.
Jungle drums pounding about a whispered 30% pay cut for many
at Genworth...
telegraph wires humming over a rumored recent U.S. Bank
lay off some 14 AE's, 3 RVP's, and a major change in the comp
plan for those left. (This comes on the heels of eliminating
some 1,200 brokers a few weeks ago.) The plan is that the
company wants to do more volume with fewer brokers and fewer
AE's - interesting given that U.S. Bank Home Mortgage
moved up into the #3 slot in total originations behind Wells
and Chase during the 2nd quarter.
Perhaps someone will find a home with Home State Bank,
“a profitable, 100-yr-old federally-chartered community bank
headquartered in Crystal Lake, Illinois. Home State has a
newly-created VP/OPS Manager opening to
accommodate/expedite continued growth. This will be a highly
visible member of senior management team with the authority to
not just implement company policy but also create it,
especially vis-à-vis employee leadership & development.”
The candidate will work from state-of-the-art operations
center in Crystal Lake. Local candidates only, please. For
more information on the bank visit www.homestbk.com, and
resumes should be sent to David Impey at dimpey@homestbk.com.
Flagstar
folks
learned of a new management change,
with Mike Tierney replacing Joe Campanelli as president
immediately and as CEO on November 1. The announcement was
full of platitudes for Mr. Campanelli ("...excellent job of
transforming Flagstar and its return to profitability...") Mr.
Tierney comes from within Flagstar, as he was Managing
Director of Personal Financial Services, and lives in Michigan
- a big help.
Lockologists
were busy last week. Applications for U.S. home mortgages
last week were up over 16%, with refi's accounting for
83% of them. Yes, refi's were up almost 20%, hitting their
highest level since early 2009, but purchase apps were up
also, increasing almost 4%. (It would be fascinating to see
how many of those refi apps were from borrowers who had refi'd
during 2012 already.)
A
quick follow up to a note yesterday about PennyMac
Mortgage Investment Trust's purchase of a $452 million
portion of a $622 million non-performing residential mortgage
pool: Debtwire reports that it was sold by Citi. John
Wilen from Debtwire reports that, "The REIT paid 42% of
the mortgages’ unpaid balance, or $189.84 million...translate
to a “quick sale” or broker price opinion (BPO) price of
roughly 63, the trader said. A second trader, head of loan
trading at another primary dealer, explained that most NPL
buyers look at collateral value, not loan balances."
Yes,
banking and mortgage margins are sky-high, and companies are
socking it away for a rainy day – like this one. The
federal mortgage task force that was formed in January by
the Justice Department filed its first complaint against a
big bank (JPMorgan Chase, which took over Bear Stearns/EMC),
citing a broad pattern of misconduct in the packaging and sale
of mortgage securities during the housing boom. The suit,
which apparently doesn’t
have much new information, was brought in New York State
court by Eric T. Schneiderman, the state attorney general, who
is also a co-chairman of the Residential Mortgage-Backed
Securities Working Group. The complaint contends that
Bear Stearns and its lending unit, EMC Mortgage, defrauded
investors who purchased mortgage securities packaged by the
companies from 2005 through 2007. The firms made material
misrepresentations about the quality of the loans in the
securities, the lawsuit said, and ignored evidence of broad
defects among the loans that they pooled and sold to
investors. “Moreover, when Bear Stearns identified problematic
loans that it had agreed to purchase from a lender, it was
required to make the originator buy them back. But Bear
Stearns demanded cash payments from the lenders and kept the
money, rather than passing it on to investors, the suit
contends.” Check it out: http://www.nytimes.com/2012/10/02/business/suit-accuses-jpmorgan-unit-of-broad-misconduct-on-mortgage-securities.html?_r1&.
Continuing
with legal news, the Federal Deposit Insurance Corporation
(FDIC) and the Consumer Financial Protection Bureau (CFPB)
have reached a settlement with American Express Centurion
Bank (Salt Lake City) for deceptive debt collection and
credit card marketing practices, in violation of section 5 of
the Federal Trade Commission Act. “This action results from a
FDIC and Utah Department of Financial Institutions
examination, in which the CFPB joined last year. The CFPB, the
Office of the Comptroller of the Currency (OCC), the Utah
Department of Financial Institutions, and the Board of
Governors of the Federal Reserve System took separate actions
against various entities related to the Bank. Under the
settlements, American Express agreed to the issuance of
Consent Orders, Orders for Restitution, and Orders to Pay
(Orders) which result in total restitution from all entities
of approximately $85 million to more than 250,000
affected consumers, and the imposition of civil money
penalties totaling approximately $27 million. “The
FDIC and the CFPB determined that American Express Centurion
violated federal law prohibiting unfair and deceptive
practices by, among other things: Misrepresenting to consumers
that if they entered into an agreement to settle old debt
(that was no longer being reported to consumer reporting
agencies), such settlement would be reported to consumer
reporting agencies and thereby improve the consumers' credit
scores. In fact, no such reporting occurred. Using settlement
solicitations that implied that consumers who entered into
settlement agreements to partially pay such debts would have
the remaining balance of their debts forgiven, when in fact
the balance remained a debt owed to American Express. Using
solicitations that misrepresented the points and awards
consumers would receive upon enrollment in one of American
Express' credit card products.”
How
about
some private mortgage insurance and title insurance news?
The industry is certainly waiting for any news on QRM and QM,
and how it will impact its business, but in the meantime…
Sure
there are rumors that those folks at Genworth recently took a
30% pay cut, but they're still in MICA! The number of
borrowers using private mortgage insurance (MI) keeps going
up, according to the monthly numbers from Mortgage Insurance
Companies of America. MICA’s member companies (which include
Genworth, Mortgage Guaranty Insurance, and Radian Guaranty,
but not Essent, UG, or National MI) – reported a total
of $397.5 billion in primary insurance in force for August, an
increase from $396.4 billion in July. MICA member companies
reported a total $11.2 billion volume of new MI written on
newly-originated conventional mortgage loans in August, a step
up from $10.1 billion in July. Dollar volume on new insurance
has risen steadily each month since the start of the year.
Good thing, since Moody’s recently announced it is continuing
its review of Genworth and its MI companies that may result in
a downgrade.
Word
has it that MGIC Investment Corporation is on its way to
resolving stipulations set forth by Freddie Mac in order
for the insurance company to continue issuing insurance. MGIC
announced that Freddie reduced the amount MGIC Investment must
pay to its subsidiary from $200 million to $100 million. The
GSE also extended the deadline for this contribution from the
end of September to the end of December. Additionally, Freddie
Mac approved MGIC Indemnity Corporation (MIC), a subsidiary of
MGIC, to write insurance in 16 jurisdictions besides Wisconsin
“that have specific regulatory capital requirements when MGIC
is not able to write new business in a jurisdiction because
MGIC would not meet those requirements,” according to MGIC’s
announcement. MIC is approved to write new business through
the end of 2013 in areas where MGIC does not meet the
necessary capital reserve requirements. This is an extension
of its previous approval through the end of this year. With
$167 billion in insurance on 1 million mortgages as of the
second quarter of this year, MGIC is the nation’s largest
private mortgage insurer.
Radian
Guaranty,
the private mortgage insurance subsidiary of Radian Group,
announced it will begin offering “a unique program, the Responsible
Homeowner Reward (RH Reward), to encourage borrowers,
who recently modified their mortgages through the U.S.
Department of the Treasury’s Home Affordable Modification
Program (HAMP), to remain current on their new mortgage
payments. Administered exclusively by Loan Value Group LLC,
the RH Reward program pays cash rewards to eligible homeowners
for making their mortgage payments on time. Radian selects
eligible homeowners for enrollment in the program and a reward
account is then established in their name that grows with each
on-time mortgage payment, up to a maximum amount. The reward
is paid in cash when the mortgage is refinanced or paid off
and the homeowner pays nothing to participate, remaining
eligible by simply making their mortgage payments on-time.
Old
Republic
Title Insurance Group sent out a release to the industry
reminding us that the settlement process as a vital component
of the mortgage lending and real estate transaction, and
discussing its safeguards. The release said, “Prior to being
approved as an Old Republic agent, each prospective agent goes
through an in-depth application process. Key steps in the
application process include: validation of licenses and
insurance coverages, background checks, including credit
history of key principals of the agent, and review of
settlement account practices and procedures. Applicants who
successfully complete our selection process and become our
agents undergo regular monitoring, auditing and reviews
consistent with risk factors identified through our annual
certification protocol. Our agents remain subject to periodic
background and credit checks as circumstances merit. Our
procedures for monitoring and auditing our agents are the most
thorough undertaken in the industry...Please feel free to
leave a question or ask for a call by clicking on the
following link: Lenders.Contact@OldRepublicTitle.com.”
There sure are plenty of government and private stats that we
wade through every month regarding the health of the housing
market. The latest comes from CoreLogic, which reported that
home prices in August posted the largest annual increase in
over six years. Although it was nearly flat to July’s number,
it was up over 3% from August 2011. (Excluding distressed
sales - sales of bank owned real estate (REO) and short sales
- home prices increased 4.9 percent on an annual basis in
August and 1 percent from the July index.)
“You
can’t keep a good market down!” Yesterday mortgage-backed
securities, in the rate range that impacts rate sheets for
borrowers and brokers – where the Fed is buying $4 billion a
day, improved nicely. Fannie 3’s, which are “buckets” for
3.25-3.625% loans, improved by nearly .250 in price by the end
of the day, and the 10-yr closed at 1.62%. And it is hard to
be very focused on economic numbers out of Chicago, or the
ISM, or Richmond, when entire countries in Europe continue to
be in trouble and the Fed is buying huge quantities of agency
mortgages.
But
next to housing, jobs are critical, and we’ve had the ADP
Employment report for September this morning on the
non-government jobs sector. ADP reported private sector
employment increasing 162k, much less than expected.
Friday’s Non-Farm Payroll number is expected to be about
+115k, with the unemployment rate sliding up to 8.2%. We’ll
also have the ISM Non-Manufacturing Index out at 8AM MST. Early
on we are practically unchanged from Tuesday’s close, with
the 10-yr still at 1.62% and MBS prices steady.
The awesome power of a wife's love...
A very old man lay dying in his bed. In death's doorway, he
suddenly smelled the aroma of his favorite chocolate chip
cookie wafting up the stairs.
He gathered his remaining strength and lifted himself from the
bed. Leaning against the wall, he slowly made his way out of
the bedroom, and with even greater effort forced himself down
the stairs, gripping the railing with both hands.
With labored breath, he leaned against the door frame, gazing
into the kitchen. Were it not for death's agony, he would have
thought himself already in heaven.
There, spread out on newspapers on the kitchen table, were
literally hundreds of his favorite chocolate chip cookies.
Was it heaven? Or was it one final act of heroic love from his
devoted wife, seeing to it that he left this world a happy
man?
Mustering one great final effort, he threw himself toward the
table.
The aged and withered hand, shaking, made its way to a cookie
at the edge of the table, when he was suddenly smacked with a
spatula by his wife.
"Stay out of those," she said. "They're for the funeral."
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 looming fiscal cliff brought on
by Washington DC. 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.
