“If you want to go fast, go alone. If you want to go far, go together.” This African proverb could apply to bicycle racing, but more importantly for the residential lending industry, it seems to be coming true. And certainly to banking – does anyone need an easy, clever chart on bank history? Here you go: http://www.motherjones.com/files/images/big-bank-theory-chart-large.jpg – it looks like the NCAA basketball bracket. One can’t help but think about retirement accounts that profited or suffered with each deal…
But the trend with banks continues unabated. With no banks being created, is it the FDIC’s intent, along with other regulators, to continue to concentrate assets and deposits? KBW announced its role in CenterState Bank’s signing of a definitive merger agreement under which CenterState will acquire First Southern Bancorp, Inc. the parent company of First Southern Bank. Upon completion of the holding company merger, First Southern Bank will be merged with and into CenterState Bank of Florida, NA. First Southern Bank, which is headquartered in Boca Raton, Florida, currently operates 17 banking locations in the Orlando, Jacksonville, and West Palm Beach As of December 31, 2013, First Southern reported assets of $1.1 billion, loans of $635 million and deposits of $883 million – a big fish.
Bank of the Ozarks ($4.7B, AR) will buy Summit Bank ($1.2B, AR) for about $216mm. AltaPacific Bank ($238mm, CA) will acquire Mission Oaks National Bank ($100mm, CA) for about $3.5mm in cash. Kearny FSB ($3.2B, NJ) will acquire Atlas Bank ($110mm, NY) for an undisclosed sum. CapStar Bank ($1.1B, TN) will acquire the mortgage lending company Farmington Financial Group for an undisclosed sum. Farmington has about 30 employees. (What does one buy when a mortgage company is purchased? Unless there is servicing, can’t the assets stroll out the door?) Union Bank & Trust ($229mm, NC) will acquire a branch (plus certain loans and deposits) from Southern Bank and Trust ($2.3B, NC) for an undisclosed sum. Salisbury Bank and Trust ($585mm, CT) will acquire a branch from Union Savings Bank ($2.4B, CT) for a 2.32% deposit premium. And Pioneer Bank SSB ($251mm, TX) will acquire Union State Bank ($37mm, TX) for an undisclosed sum.
Only three banks have been closed in 2014. Last Friday regulators closed Syringa Bank ($153mm, ID) and sold it to Sunwest Bank ($673mm, CA) under a purchase & assumption agreement. Sunwest gets 6 branches, all deposits (excluding brokered) for a 0.75% premium and essentially all of the assets.
Citing regulatory burden and low profits, Cape Bank ($1.1B, NJ) said it has exited the residential mortgage loan business. (“Management also made the difficult decision to exit the residential mortgage loan origination business. This had been an important business segment for most of our 90 year history, but management believed changes within the industry required a scale of operations that we would not be able to profitably deliver. Further, we believe that exiting this business segment will serve to improve Interest Rate Risk management and we expect to realize a reduction in operating expenses in 2014.”)
Cape Bank won’t be producing any more HMDA data. In fact, yesterday here in Florida MBA president Dave Stevens reminded a crowd that HMDA reporting institutions have dropped by about 1,000 in the last six years or so. Recently a Capital Markets guy I know said to me, “What’s the use of HMDA data if you can’t parse it?” Like most things in life nowadays, most questions lead you to some website where you’ll find the answer….that is, after you watch a few videos of dogs chasing flashlights on YouTube. Although I have posted the CFPB’s ‘Explore the Data’ page in the past, a revisit to the site this past week has revealed an expansion of filterable material, including date ranges (currently ‘10-’12), by loan location, by purpose, by lien, and even by lender ID (Don’t have the lender ID? No problem, the site contains an FFIEC tool to look up specific lenders). So if I wanted to see how many FHA purchase, SFR loans in Pima County, Banco de XYZ originated last year, I could. You can even display the data in a custom summary table, download it into a .CSV format, or, your customizable data set can be shared by link contained within an email: http://www.consumerfinance.gov/hmda/explore. Who needs those huge binders anymore?
The CFPB released its latest Supervisory Report (http://files.consumerfinance.gov/f/201401_cfpb_supervision-highlights.pdf), detailing issues and concerns uncovered through their supervision program between July and October 2013. The CFPB also listed its various supervisory actions taken in the time period covering the Report, including consent decrees and penalties imposed for HDMA violations. The Report further notes changes to the CFPB exam report template in order to allow the Bureau to reduce the amount of time it takes to finalize the report and provide them to supervised entities more efficiently. The new template eliminates recommendations for currently satisfactory processes, eliminates the list of CFPB team members participating in the review and creates a single section in the report that includes all items the entity is expected to address when a violation of law or weakness in compliance management is discovered. Finally, the latest Report summarizes the supervisory bulletins that CFPB has issued since its last Supervisory Report.
As a reminder, the CFPB recently revised its examination procedures for servicing and originations. The revisions update the CFPB’s existing examination procedures to reflect the new mortgage rules which became effective on January 10th. The revisions for mortgage servicing (http://files.consumerfinance.gov/f/201401_cfpb_mortgage-servicing-exam-procedures.pdf), and the revisions for mortgage originations (http://files.consumerfinance.gov/f/201401_cfpb_mortgage-origination-exam-procedures.pdf) can be accessed at those pages.
June 1st is a moderately big day for servicers depending on how prepared firms will be once changes to settlement procedure requirements are rolled out. Fannie Mae has released updates to its lender-placed insurance requirements, which must be implemented by the June 1st deadline. Emily Ross of Bankers Advisory writes, “Servicers must work with their lender-placed, or force-placed, insurance providers to implement these changes by the required change date, but are encouraged to do so before this date. Fannie Mae has adopted the definition used by the CFPB for Lender-Placed or Force-Placed Insurance.” There are three changes with this update: (1) The first modification prohibits the inclusion of servicer commission or other payments earned by the servicer; meaning that the payments Fannie Mae makes, or reimburses, must not include any incentive based pay for the servicer, (2) Fannie Mae changed its requirements “to disallow servicers from using affiliated business for force-placed insurance,” and (3) Fannie Mae is now requiring servicers to file a lender-placed certification with Fannie Mae attesting to their compliance with the two previous rule modifications. The certification must be contained in the Lender Record Information and can be filed with Form 582.
Oregon’s Department of Business and Consumer Services has adopted rules establishing the process for accepting consumer finance licensing applications, renewals, and administrative actions via the Nationwide Mortgage Licensing System. These rule change take effect immediately, and can be found on Oregon’s Division of Finance and Corporate Securities website.
Arkansas has modified provisions regarding the state’s Fair Mortgage Lending Act. On January 10, the Arkansas Securities Department finalized amendments to certain sections of the rules that implement the Fair Mortgage Lending Act. The regulations were amended to expand disclosure requirements for new and transferred loans. The entire FMLA can be accessed here.
Let’s see what is going on with some vendors, investors, and aggregators out there.
First off, Wells Fargo’s sale of residential-mortgage servicing rights (MSRs) to Ocwen Financial is in limbo after a New York State regulator has indefinitely halted the $2.7 billion deal. The person said the office of Benjamin Lawsky, superintendent of New York’s financial services department, has concerns over Ocwen’s ability to take on more loans. (Lawsky supervises insurance companies in the state and all banks chartered by the state – but there might be a jurisdictional issue given Ocwen’s non- bank status.) The Ocwen deal called for Wells to sell servicing rights on $39 billion in loans. There are concerns in the industry about the level of capital non-bank servicers should be required to have, which is a big deal since they have been the ones making a market for servicing.
“Rob, what do you hear from Fenway Summer?” Funny you ask – Raj Date made headlines this week with plans to launch a subprime credit card. Per American Banker, “The new card, to be issued through a partnership with an unnamed bank, is thought to be the first entrant into the subprime card market in several years.” I have heard nothing about the company buying non-QM loans.
Darn – I knew that I should have started a risk management company instead of writing a daily commentary! First American Financial Corp., the second-largest U.S. title insurer, agreed to buy Interthinx Inc. from Verisk Analytics Inc. for $155 million. (“Title insurers, which use their records and public documents to verify a seller is a property’s true owner and that it’s free from liens, have been expanding business with mortgage companies. Fidelity National Financial Inc., the No. 1 title insurer, last month completed the acquisition of Lender Processing Services Inc. for more than $3 billion. Interthinx will help First American offer real estate customers ‘further assurances in areas that present risk, including fraud, identity and income validation, collateral adequacy and compliance,’ Dennis Gilmore, chief executive officer of the insurer, said in the statement.”)
For those tired of starting the mortgage origination race from the same spot as everyone else, Paragon Global Resources, an international relocation company with a portfolio of Fortune 500 companies as clients, has announced its intention of diversifying into a more retail-oriented origination platform. Paragon has been in the business of relocating employees for more than 20 years, but began originating for their own clients more than 10 years ago through its subsidiary, GenEquity Mortgage. Opportunities are nationwide for producing branch managers, originators and even those looking for regional positions. GenEquity is currently licensed in 22 states; to learn more contact Louis Weber at [email protected].
CMG Correspondent Lending announced changes to its VA IRRRL Program. Effective on any VA IRRRL loan locked on or after February 10th, 2014: “The following overlays will be in effect: all transactions will require an AVM at the time of submission; we will allow a maximum LTV to 150%; there will be a price adjustment if the transaction exceeds 125% LTV to 150% LTV. (See rate sheet for pricing adjustment.) CMG does not have an exclusionary list for Vendors. Your AVM can be ordered through any HVCC approved appraisal management company. A 2075 appraisal will be accepted if an AVM is unavailable.”
Vantage Production, LLC, an innovator in customer relationship management (CRM), marketing, sales and content solutions, announced that MCS Mortgage Bankers Inc., a Patchogue, New York-based mortgage lender with 15 retail branches and multistate growth plans, has chosen the Vantage Integrated Production (VIP) platform as its customer relationship management software. MCS Mortgage Bankers was founded as a full service FHA and conventional retail lender in 1995 and is licensed in 10 states.
Effective immediately, BAML is no longer ordering pre-borrower funding CDAs on behalf of lenders due to the ECOA changes; instead, lenders will need to order their own CDA and/or field review from Clear Capital, which is the current approved vendor. In addition, BAML will no longer review loan-level waiver requests on a pre-borrower funding basis, and Lendermail will not discuss anything on a specific loan.
We had a spate of economic news yesterday, and rates crept a little higher. Initial claims for jobless benefits decreased by 20,000 to 331,000 in the week ended Feb. 1, slightly lower than the 335,000 forecast. (The four-week moving average for claims, which evens out bumpy week-to-week data, ticked up slightly to 334,000 from 333,750.) The Trade deficit widened 12% to $38.7BB in December, more than forecast. Non-Farm Productivity increased at a 3.2% annualized rate in 4Q13, stronger than the 2.8% forecast, and followed an upwardly revised 3.6% gain in 3Q. Challenger came out with its 2014 January Job Cut Report saying that planned cuts were up 50%.
Thomson Reuters reported that “MBS volume was above normal with Tradeweb reporting at 108 percent of the 30-day moving average” but we still have originator supply totaling just over $1 billion while the Fed’s buying is averaging $2.48 billion per day. Agency MBS prices worsened about .125 while the 10-year T-note was down .250 (2.70% yield). The BLS employment report comes out this morning. Nonfarm Payroll is expected to come out at +185k while the unemployment rate is projected unchanged at 6.7 percent. In the very early going we’re unchanged from Thursday’s close.
Guys, let’s skip the joke. Code Red! Remember that Valentine’s Day is one week away. Opinions differ as to who was the original Valentine, but the most popular theory is that he was a clergyman who was executed for secretly marrying couples in ancient Rome. In A.D. 496, Pope Gelasius I declared Feb. 14 as Valentine Day. Esther Howland, a native of Massachusetts, is given credit for selling the first mass-produced valentine cards in the 1840s.
As for me, I’m gonna spend Valentine’s Day with my ex…… box 360.
(Copyright 2014 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.)