July 13: Correspondent jobs; recent state-specific lending law updates; Greek settlement shifts rates higher

Here’s some good news. The National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index which analyzes trends in home values, home equity and mortgage debt of homeowners 62 and older, has reached its highest level since first quarter of 2007. The RMMI increased 1.6 percent from the last quarter in 2014. The first quarter of 2015 saw a $63.5 billion increase in senior home equity due to an estimated $61.1 billion gain in the aggregate value of senior housing and a $1.9 billion decline in senior-held mortgage debt. The $3.96 trillion estimated aggregate value of home equity owned by seniors in Q1 of 2015 is 1 percent below the peak level of $4 trillion in the final quarter of 2006. The current senior equity levels indicate a 34 percent recovery since the post-Recession crisis, where senior equity levels fell to $3 trillion.


Verus Mortgage Capital continues to expand its correspondent sales team and is looking to add an experienced Regional Manager in the East and Account Executives thru out the U.S. Verus Mortgage Capital is an independent national mortgage investor. Verus offers correspondents responsible non-prime ATR compliant lending products that fill the credit void in today’s market. Verus consistently evaluates today’s market and credible borrower financing needs to offer our Correspondent partners innovative solutions. Verus Mortgage Capital is an affiliate of Invictus Capital Partners. Qualified candidates can send their confidential resume to Jeff Schaefer, Executive Vice President of Sales.


On the retail side, congrats to Suzanne Schakett. The NRL team has added Suzanne to the Executive team as Senior Vice President of Retail Production. Suzanne has over 20 years of experience in Mortgage Banking, having been a previous manager with many large organizations, is an expert in Builder production, and will provide leadership and guidance for continued expansion.


Let’s take a look at some affordability news along with recent state-specific changes.


RealtyTrac and Down Payment Resource released an article that determined the best and worst markets for low down payment buyer affordability and accessibility by examining median income, home price and homeownership program availability in 370 U.S. counties with a population of at least 100,000. Their results found that of the counties analyzed, the top five highest for affordability and accessibility for down payment buyers included Ashtabula, Ohio, Imperial, California in the El Centro metro areas, Hernando, Florida in the Tampa metro area, Clayton, Georgia in the Atlanta metro area and Lackawanna, Pennsylvania in the Scranton metro area. Counties ranking the worst for affordability and accessibility for low down payment buyers include New York, New York, Fairfax, Virginia, Charleston, South Carolina, Santa Clara, California and Forsyth, Georgia in the Atlanta metro area.


Of the 370 counties analyzed, 90 percent were more affordable for low down payment buyers in April 2015 than their historic averages and there were 36 counties of the 370 analyzed that were less affordable for low down payment buyers. The average amount of down payment help was $10,443 which was about 6.84 percent of the median sales price in April. The counties with the largest average down payment assistance was San Francisco, California at $51,713, followed by Orange County, California at $43,121, Los Angeles, California at $40,004 and King County, Washington in the Seattle metro area at $33,735.


Texas roadhouse barbeque is home to some of the best bread in the country (will gladly accept bread as payment for the product placement); Texas itself is home to one of the most at risk housing markets in the country. Arch Mortgage Insurance Company released the Summer 2015 edition of its Housing and Mortgage market review and they found that Texas and North Dakota are the two most at risk states of home price declines over the next two years. The oil giants run this risk due to the “outside chance that energy prices fall materially from here” with North Dakota carrying a 38% chance and Texas with a 32% chance home prices will decline. Not surprisingly, these two states also lead the way in most overvalued homes relative to income. North Dakota leads the way with 15% and Texas is following close behind with 13%. North Dakota has an additional setback: employment, which fell by 1.8% in the last 3 months (the worst in the country). Good news for the rest of the country: the housing market is booming and it doesn’t look like it has any chance of a decline in the next two years. 42 states have a 10% or less chance of home prices declining in the next two years with the national average standing strong at 8%.


Out west, Oregon has passed House Bill 3244, amending ORS 86.157 regarding payoff statements and borrower obligations. A new definition for payoff statement has been defined as “a written statement that sets forth, as of the date the lender prepares the statement, amounts a borrower must pay in order to fully satisfy the borrower’s obligation under a real estate loan agreement.” The term “debt” has also been replaced with “obligation” and a borrower or agent may depend upon a payoff statement for the purpose of establishing the amount the borrower must pay to satisfy their obligation. If the amount a borrower owes is not on the payoff statement and the borrower satisfies the obligation included in the statement, the lender may only recuperate the amount owed as an unsecured obligation or foreclosing upon any other property that secures the obligation.


Oregon has also enacted House Bill 2532 to require disclosures in communications about reverse mortgages, effective January 1st, 2016. Disclosures must be in a large enough font and color that contrast or is set off from the surrounding text. The amendment requires inclusion of a summary of the terms of the reverse mortgage loan contract in any advertisement, solicitation or communication where the contact includes the following provisions: “Interest on a reverse mortgage is not deductible from the person’s income tax return until the person repays all or part of the reverse mortgage loan”, “the person retains title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurances, maintenance and related taxes. Failing to pay these amounts may cause the reverse mortgage loan to become due immediately”, “the balance of the reverse mortgage loan grows over time and the lender charges interest on the outstanding balance,” and “the lender will charge an origination fee, a mortgage insurance premium, closing costs or servicing fees for the reverse mortgage, all or any of which the lender will add to balance of the reverse mortgage loan.” These amendments exempt financial institutions as defined in ORS 706.008, a licensee as defined in ORS 725.010 or a mortgage banker or mortgage broker licensed under ORS 86A.106.


Minnesota revised its provisions relating to the action of foreclosure, modifying the publication requirements and defenses to foreclosure sales. These requirements regarding advertisements are effective on July 1st and apply to foreclosures where the notice of pendency is recorded on or after that date. The amendments clarifies that every foreclosure sale by advertisement under power of sale that meets all statutory requirements is valid and effective against any objections including a defense that notice for postponement by the party conducting the sale was not timely or properly mailed or published.


Last month in California a statewide coalition has asked federal regulators to investigate OneWest bank foreclosures that have been concentrated in communities of color in California. Of the more than 35,000 foreclosures the company has conducted in California since April 2009, 68 percent of the foreclosures were in areas where the nonwhite population is greater than 50 percent, whereas 35 percent are in zip codes where the nonwhite population is greater than 75 percent of the total population. According to HMDA data provided by OneWest, in 2012 and 2013, the bank originated about 50 percent fewer home purchase and refinance mortgages than the industry average to Asian-American Pacific Islander borrowers.  The bank also originated zero home improvement and home purchase loans to African Americans in the Los Angeles area in 2012 and 2013.


Wyoming legislature has recently adopted modifications to the Uniform Trust Code, adopted on July 1. Sections have been included to clarify that a discretionary distribution from a discretionary trust creates no property interest in the beneficiary. Changes have been made that refer to a creditor’s claim against a settlor with respect to irrevocable trusts where only discretionary distributions can be made to the settlor. A trustee’s power to make distributions of all or any portion of trust income or principal in further trust should not be exercised such that it would prevent qualification for a federal income, estate, gift or generation-skipping transfer tax benefit claimed for the trust. Additional subsections have been included to address powers of a trustee, where a trustee may exercise elections in regards to taxes, separate a trust with more than one beneficiary into separate trusts or shares, make a distributions or pay trust expenses from a trust with two or more sub-trusts or shares from any of those sub-trusts or shares permitting income distributions to beneficiary and decide each taxable year whether principal distributions to a beneficiary include net realized capital gains and losses.


People are still talking about Seattle. Remember that it has raised the minimum wage to $15 per hour in order to help entry-level workers afford Seattle’s rising living expenses. Other states are considering doing the same, but unfortunately, this change may have come too late. In January of 2012, if dual-income earners made $15 an hour and pooled their resources they would have been able to afford the median apartment in 24 of the largest 35 metros in the U.S. without having to spend more than 30 percent of their income on rent. Rents have increased since then and now the $15 hourly wage would allow dual-earner households to afford the median rent for two renters in 16 of the largest U.S. metros.


The most affordable metros in April for dual-earners were Detroit, where earning $11.21 an hour would be needed to afford the national median rent, Pittsburg at $11.24 per hour, St. Louis at $11.37 per hour, Cleveland with $11.61 an hour and Indianapolis at $11.99 per hour. The most expensive cities include, San Jose which would require dual earners to make $32.87 an hour to afford the median rent, San Francisco at $31.62 per hour, Los Angeles at $24.98 per hour, New York with $23.72 an hour and San Diego at $23.30 per hour. Unfortunately, single renters in Detroit would still need to earn $22.42 per hour to afford the median rent in that market, whereas a single renter in San Jose would need to earn $65 per hour. On a national level, a single renter would need to make $27.28 per hour to afford the U.S. median rent of $1,364 per month and not exceed paying more than 30 percent of their income towards rent, while two renters would need to make $13.64 per hour.


Turning to the bond markets…ah, another week, another slate of scheduled news. The big news is that Greece has bowed to nearly all the demands of its creditor nations, especially Germany, and had taken on commitments that would be extremely difficult for the Greek government to fulfill without losing the trust and support of its electorate. European officials estimate Greece needs roughly $90 billion in emergency loans just to get through the next three years. Greece will have to scrape together about $50 billion in state assets, which will be used as collateral – to stay in the Euro. Kicking the Greek can down the road? Sure. But oh well…


Do “Business Inventories” statistics outweigh possible changes in the European Union or trembling in the Chinese stock market? Of course not. But there are still numbers out, starting with, uh, zip today. But tomorrow are Retail Sales and Import Prices. Wednesday, the midpoint of July already, includes Empire Manufacturing, the Producer Price Index, the Industrial Production & Capacity Utilization couplet, and Fed’s Beige Book. Thursday is the usual Initial Jobless Claims, but also the NAHB Housing Market Index and Philly Fed. Friday is the Consumer Price Index, Housing Starts, Building Permits, and a bunch of University of Michigan statistics about the economy that I imagine teams of undergrads work on for weeks.


We closed the 10-yr Friday at 2.42% and this morning we’re at 2.46% with agency MBS prices worse by .250-.375. Nice to have Greece settled for the time being, but…



Capitalism Explained by Cows (part 1 of 3)



You have two cows.

Your neighbor has none.

You feel guilty for being successful.

You vote people into office that put a tax on your cows, forcing you to sell one to raise money to pay the tax. The people you voted for then take the tax money, buy a cow and give it to your neighbor. You feel righteous.

Barbara Streisand sings for you.



You have two cows.

Your neighbor has none.




You have two cows.

The government takes one and gives it to your neighbor.

You form a cooperative to tell him how to manage his cow.





(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