Jan. 22: MI & retail jobs, non-QM expansion; rating agency settles; bank M&A on fire; agency news; Europe’s markets move our rates

Youth might be wasted on the youth, but maybe not education. MBA Education today announced the launch of Mortgage Banking Bound, a program designed to educate college students about the mortgage banking industry and job opportunities in the loan-process cycle. Students can access Careers in Mortgage Lending, a six-lesson, instructor guided online course designed to familiarize them with the residential mortgage lending industry starting on February 10, 2015. The program will offer students attending community colleges and universities the chance to learn from real estate finance industry experts, network with leading organizations, write daily commentaries of questionable value, and access the latest industry information, job boards, career events, and educational offerings with an MBA Student Membership. (Pick one of those that wasn’t in the MBA’s description!)


Silvergate Bank, a correspondent lender in La Jolla, CA is further expanding its leadership in the NonQM world. Recent guideline enhancements include LTV’s up to 70% and Alt Doc with 1 year tax returns or W-2, with current paystub and CPA letter. “Our NonQM programs are user friendly and competitively priced with strong premiums”, states Alan Peviani, the Director of Sales and Marketing.  In addition, Silvergate Bank is continuing to build a nationwide correspondent platform and is seeking mortgage banking clients with both retail and TPO origination channels.  Warehouse Lending is also available, so if your company is considering moving into NonQM and looking for ways to increase production and profitability, please contact Alan Peviani.


On the job front, West Coast-based RPM Mortgage, Inc. is looking to grow its sales force in Arizona, California, Colorado, Nevada, Oregon and Washington. Take a look at what RPM offers in this video and contact RPM at learnmore@rpm-mtg.com (principals only).  RPM was ranked by Scotsman Guide as the No. 5 mortgage lender in Top Retail Volume and No. 14 in Top Overall Volume for 2013. In addition, RPM is the only privately owned U.S. mortgage originator to have earned Standard & Poor’s “Above Average” ranking in all ratings categories.


And private mortgage insurance company National MI is growing. National MI is searching for a National MI Account Manager in the Los Angeles Metro market, and a National MI Sales Account Representative for all of Southern California. The National MI Account Manager utilizes their expert understanding of the residential mortgage industry and their existing relationships in the Los Angeles metro market, to build strong relationships with key senior level client advocates and influencers, and drive new business. The Sales Account Representative will reside in Southern California and is responsible for promoting the sale of National MI products, services and programs to clients through a consultative selling approach via personal sales calls and email/phone contact, in their assigned territory in support of the Account Manager’s initiatives. This individual will also assist the Managing Director in sourcing new business from originators, and will manage the relationships of specific clients by serving as a customer advocate, educator, and loan issue problem-solver. For the complete job posting, see National MI’s careers page.


Before I go on, let me correct something that was noted in yesterday’s commentary. I listed United Guaranty’s new number–877.642.4642 (877.MI.CHOICE)—as belonging to MGIC rather than United Guaranty. To repeat, that is not MGIC’s new phone number – it is UG’s. My apologies for the confusion, and thank you to those who pointed it out to me.


Moving on while striving for accuracy, we all learned that Nationstar snagged $8.5 billion (unpaid principal balance – UPB) of mortgage servicing rights from a top-four financial institution. Specifically, it closed on the deal which had been previously announced. The portfolio acquired is GSE servicing and was acquired from a “top-four” financial institution. The $8.5 billion portfolio was part of $27 billion of previously announced acquisitions that were under contract as of the end of 3Q. NSM is indeed buying servicing, and since the end of the second quarter of 2014 the company has announced the acquisition of $43 billion, of which $37 billion has now closed. The company expects to close the remaining $6 billion by the end of 1Q.


Looking backward, Standard & Poor’s agreed to pay the U.S. government and two states more than $77 million to settle charges tied to its ratings of mortgage-backed securities. Many in the industry have been waiting for the older rating agencies to be held accountable for their role in the financial crisis, and this is a step in that direction. In its first enforcement action against a major credit-rating company, the Securities and Exchange Commission accused S&P of fraudulent misconduct, saying the company loosened standards to drum up business in recent years. The agreement requires S&P to pay more than $58 million to the SEC, $12 million to New York and $7 million to Massachusetts.


The news this morning is that Royal Bank of Canada is buying California’s City National Bank (with its $32 billion in assets) for about $5.4B in cash (50%) and stock (50%). Cathay Bank ($11.6B, CA) will acquire Asia Bank ($492mm, NY) for about $126mm in cash and stock. Merchants & Farmers Bank & Trust Co. ($319mm, LA) will acquire The Vernon Bank ($79mm, LA). And Kentucky Bank ($793mm, KY) will acquire Madison Bank ($121mm, KY) for about $7.2mm.


But in the last week other bank deals have been announced – they just don’t stop as banks try to gain efficiency and expand at the same time. In California Plaza Bank ($525mm) will acquire Bank of Manhattan ($496mm, CA) for about $70mm in cash and stock. First Sound Bank ($97mm, WA) will acquire Eastside Commercial Bank ($37mm, WA). In North Dakota, Dakota Heritage Bank of North Dakota ($149mm) will acquire The National Bank of Harvey ($50mm). Maybe I should start a National Bank of Rob.


Banks are not confined to buying other banks. Associated Bank ($26B, WI) will acquire risk and benefits consulting company Ahmann & Martin Co. (MN) for about $48mm. Optum Bank, Inc. ($3.3B, UT) will acquire the health savings business of Huntington National Bank ($64B, OH) for a 5.3% deposit premium. And Washington Savings Bank ($264mm, IL) will acquire First Federal Savings and Loan Association of Mattoon ($88mm, IL).


But all is not peaches and cream: Citibank announced it plans to close 60 CA branches this year as it continues to modify its network to focus on larger urban city centers. And regulators closed the First National Bank of Crestview ($80mm, FL) and sold it to First NBC Bank ($3.6B, LA) under a P&A agreement. First NBC gets 3 branches, all of the deposits and 78% of the assets. And things don’t always work out. Sunflower Bank ($1.7B, KS) and First Western Trust Bank ($688mm, CO) announced they have mutually agreed to terminate their merger agreement announced in Sep 2014.


There’s a lot going on with the government agencies lately. Let’s take a look at some random agency news.


Have you visited the Fannie 97% LTV Options page? Fannie Mae is now accepting delivery of 97% LTV loans — review the fact sheet, video overview, and other resources for details.

In case you missed it, a new recorded eLearning course, How to Originate Loans with Community Seconds (posted in December), provides information on process and eligibility requirements for originating subordinate Community Seconds® mortgages in connection with first mortgages delivered to Fannie Mae.


FHA Office of Single Family Housing issued additional clarification regarding the revisions to forms and model mortgage documents that accompany the previously announced changes found in the Handling Prepayments: Eliminating Post-Payment Interest Charges and Adjustable Rate Mortgage Notification Requirements and Look-Back Period final rules. The updated form, Important Notice to Homebuyers (HUD-92900-B) is posted on the HUD Client Information Policy Systems (HUDCLIPS) web page.


FHA published policies regarding responsibilities where a HECM borrower has a Non-Borrowing Spouse who is not eligible for a Deferral Period under the HECM program at the time of origination, and additional guidance for HECM Eligible Non-Borrowing Spouses. These policies are located in its Mortgagee Letter 2015-02.  This Mortgagee Letter also includes additional guidance and documentation requirements for seasoning on payoffs of existing mortgages.


It is time for FHA-approved lenders to complete an annual recertification package, which is required at the end of each fiscal year. The revised certification statements are effective as of January 1, 2015. To review the certification statements, click the appropriate link under the “What’s New” tab in the right page navigation or go to the Annual Recertification page under the “Approvals & Renewals” tab on the HUD portal.


Freddie Mac announced updates to the Servicer Success Scorecard (Scorecard). As a reminder, those changes were effective on January 1, 2015 and will be reflected in your March Scorecard.


HUD announced a 50 bps reduction in the rates charged to consumers for FHA Mortgage Insurance Premiums effective January 26, 2015.  This change applies to all FHA loans with loan terms in excess of 15 years with the following exceptions: Single family forward streamline refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009; Section 247 mortgages (Hawaiian Homelands). HUD will also allow Case Number cancellation requests for active FHA Case Numbers within 30 days of the effective date of the HUD Issues Mortgagee Letter 2015-01.


Fannie Mae updated rules for self-employed borrowers in the Selling Guide Announcement SEL-2014-16. The new changes were prompted after Fannie Mae conducted a review of policies related to self-employment income and found that lenders are not consistently adhering to these polices.  In turn, Fannie Mae came out with an updated selling guide to provide clarity and increase consistency of these policies. The changes include clarification that a lender is not required to prepare a written evaluation of self-employment income when the borrower is qualified using salaried income and self-employment is a separate and secondary source. The guide also explains that a lender is required to perform an analysis of a borrower’s business income when a borrower is using it to qualify and the requirements that allow the lender to waive business tax returns are not met. Other changes include: business income must be reported on Schedule K-1 for the most recent two years to qualify; lenders are required to perform an analysis of a borrower’s income when a borrower is relying on it to qualify and the requirements that permit the lender to waive business tax returns are not met; the definition of ordinary income has also expanded to include net rental real estate income and other rental income reported on Schedule K-1. Fannie Mae has also provided additional guidance regarding income verification for self-employed co-borrowers and the use of business assets.


Things are beginning to heat up a little in the fixed income markets. For example, for much of January mortgages (especially higher rates) have been lagging the rally in the Treasury market. But Wednesday we saw a “massive intra-day basis reversal” which helped agency MBS prices versus Treasury prices. Traders saw heavy short-covering from money managers, insurance companies and hedge funds, and along with lenders hedging their expanding pipelines added to supply. Rising yields and a steeper curve helped mortgages tighten but LOs saw many lenders change prices during the day for the worse. Adam Quinones with Thomson Reuters sagely commented that we can “expect primary/secondary spreads to stay wide as pipeline managers add coverage, evaluate potential MSR premium losses, and count the cost of blown locks. They’ll need more than 10 fingers to count the cost of five finger discount borrower loan quotes.”


This morning we’ve learned that Amex will be cutting 4,000 jobs and eBay will be cutting 2,400 – how’s that for job growth? Then we learned that the European Central Bank left rates unchanged. Lastly Mario Draghi, Europe’s equivalent of Janet Yellen, announced an expanded asset purchase program – totaling 60 billion euros per month through September 2016 or until they see a sustained improved path of inflation. It will buy investment grade sovereign bonds.


In this country the news pales in comparison. We had Initial Jobless Claims (+316k last) – they fell 10k to 307k. Later we’ll see the FHFA’s home price index, with readings not expected to rise as well as the prior +0.6% release. In this country rates are higher this morning. We closed the 10-yr at 1.85% Wednesday and this morning we’re at 1.92% with agency MBS prices worse .125-.250.



Part 2 (of 2) of “The Perks of Being Over 60”

11) You get into heated arguments about pension plans.

12) You no longer think of speed limits as a challenge.

13) You quit trying to hold your stomach in, no matter who walks into the room.

14) You sing along with elevator music.

15) Your eyes won’t get much worse.

16) Your investment in health insurance is finally beginning to pay off.

17) Your joints are more accurate meteorologists than the national weather service.

18) Your secrets are safe with your friends because they can’t remember them either.

19) Your supply of brain cells is finally down to manageable size.

20) You can’t remember the email where you saw this list.





(Copyright 2015 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