July 6: Retail jobs & construction-to-perm product; profusion of upcoming events & training; Greek drama pushes rates lower

Saturday we celebrated the 4th, and yesterday many folks celebrated the 5th…of Jack Daniels, Jim Beam…Johnny Walker… Speaking of celebrations, congrats to 66-year old Billy Joel who married 33-year old Alexis Roderick. The announcement prompted one cynic to write, “It’s amazing how much taller and better looking 5 foot 5 inch Billy Joel looks when he’s standing on his wallet.”


Lenders are always searching for either new or existing investors who are doing something a little different. BOK Financial sent out this note. “To help our clients compete in a purchase market, BOK Financial Correspondent Mortgage Services would like to remind banks and credit unions we purchase construction to permanent mortgage loans utilizing a single closing that meets Fannie Mae guidelines. Borrower benefits include time and cost savings, eliminating multiple loan applications, fees and closing costs. We offer extended rate lock options for up to 360 days commitments, with a 90 day float down, allowing the ability to lock in rate on permanent financing when construction begins.  Single-closing transactions may be used for both the construction loan and the permanent financing of a home if the borrower wants to close on both the construction loan and the permanent financing at the same time. For more information on this program or BOKF Correspondent Mortgage Lending, contact Client Relations at 855.890.1485.


On the personnel side, congratulations to Thomas Orr who has joined Finance Home America as Senior Vice President, Retail Production with its principal office located in the Houston area. Finance Home America is a division of Eustis Mortgage Corp. which has been an established Mortgage Banker since 1956, and offers a broad spectrum of products including renovation loans. Jerry Alred, President of Finance Home America, is looking forward to having Orr (the former COO of Network Funding, LP) grow the retail channel in the Southwest. The Company is seeking branch managers, loan officers, processors, underwriters, and closers in the Southwest region (Texas, New Mexico, Oklahoma, & Colorado) as well as South Carolina and in all Gulf Coast states. Those interested in joining the team should contact Mr. Orr.


And Social Finance (SoFi) continues to receive publicity for residential lending using a different model.


In legal & training news, “After years of grappling with the fallout over legacy loans and the industry’s pivot towards regulatory compliance, the American Mortgage Law Group’s Managing Member, James Brody, comments that the big bank aggregators are coming down harder than ever on correspondent lenders all across the country. He pointed out that Lehman Brothers Holdings, Inc. is pursuing over 3000 counterparties (including lenders, banks, & brokers) in connection with more than 11,000 loans, and originators being forced to expend significant sums of money to attend mandatory mediations in NYC.  In addition, James references the ongoing Rescap Liquidating Trust and Residential Financial Co. litigation that is being held in Minnesota and which he believes may only represent the first wave of RFC litigation, in that there may be many other correspondents who were forced to sign tolling agreements as a way to temporarily avoid being sued.  Finally, James advises that his office is starting to see a resurgence in repurchase and indemnification claims being made by both CitiMortgage (“Citi”) and the FDIC.”


Both AMLG and Community Mortgage Lenders of America will be co-hosting a complimentary 90-minute webinar at 11:00AM PST on July 23, titled “The Current Legacy Landscape and Tips on How to Best Defend, Negotiate, and Litigate Repurchase and Indemnification Claims”.  To sign up for this free webinar, please contact James or simply click here. Topics that are to be covered in the complimentary webinar include detailed explanations of the litigation and mitigation strategies that each of the major aggregators are presently employing (e.g., RFC, LBHI, Citi, Chase, Bank of America and more), helpful insights into many of the major legal defenses being used to combat current repurchase and indemnification disputes, explanations on how to develop strong factual rebuttals to the many different types of allegations being made in support of repurchase and indemnification claims, the impact of new regulatory developments on forward-moving repurchase and indemnification claims being made, and so on.


Speaking of upcoming events…


REALTOR® Magazine is hosting a live webcast on what your members need to know about the closing process changes coming later this year and how to help keep transactions on track as the new process and forms take effect. The webcast will be Thursday, July 16, at 2PM Eastern time, and will feature attorney Phil Schulman of K&L Gates, an expert on federal closing rules, and NAR Senior Counsel Finley Maxson. Register.


Is there a better way to conclude a conference than with a round of golf on Torrey Pines legendary South Course, the site of the 2008 and 2021 U.S. Open?  Sunday, August 9th to Tuesday August 11th; Mortgage Collaborative’s select lenders are invited to its Summer Conference in San Diego. The industries top speakers will be in attendance. Please note there is an early registration cut off for rooms at The Lodge as well as the last day to register for golf set for Friday, July 10th. Click the link for Mortgage Collaborative summer conference members’ registration.


On July 29th, Learn how to use analytics to manage and mitigate future loan repurchase exposure. Click the link to register for MBA’s Mortgage Repurchase Risk – Understanding Analytics & Trends webinar.


Plaza has posted its July wholesale webinars. If you can’t make a webinar, register anyway and the recording will be emailed to you. July 14: Understanding the Changes, Benefits and Risks of the HECM Reverse Mortgage. July 15: Fannie Mae MyCommunityMortgage® and Freddie Mac Home Possible® Mortgage (Wholesale and Mini Correspondent). July 21: Analyzing Personal and Business Tax Returns: Cash Flow Analysis (1040/1065/1120S/1120). July 22: FHA 203k Streamlined Mortgage Overview (Wholesale). July 22: Reverse Mortgage Basics


NAR is partnering with the Hogan Lovells Unmanned Aircraft Systems (UAS) Group to host a webinar on the regulatory and business hurdles associated with the operation of unmanned aircraft systems. The event, set for July 9 at 2 p.m. Eastern time, will provide information about integrating drone technology into a real estate business and obtaining a Section 333 waiver from the Federal Aviation Administration. Register.


Summer just got better with CAMP’s 2-day experience in luxurious Manhattan Beach. Join CAMP, August 6th and 7th, with leading experts and key regulators who will unlock the secrets of our industry. Featured speakers include yours truly, Barry Habib, John Stevens, and Nancy West.


August 20-21 is the Louisiana Mortgage Lenders Association Education Conference. It is being held in New Orleans.


If you’re in Florida between August 26-29 the Florida Association of Mortgage Professionals is having its Convention and Trade Show in Orlando.


Mortgage Bankers of the Carolinas is now accepting registrations for its 60th Annual Convention October 10th-12th. For more information, click the link for MBAC 60th Annual Conventional.


MBA New Jersey’s TRID Town Meeting will still be held on July 9th to resolve critical industry interpretative questions. Registration information is available here.


Registration deadline is August 24th for Zelman & Associates 2015 Housing Summit in Washington D.C. Click here to register for the 8th Annual Housing Summit September 10th and 11th.


How about some more press for those rascally Millennials and student loans?


An interesting stat demonstrates the lack of starter homes on the market. 10 years ago, about a quarter of new homes had 3 or more bathrooms. Today, that number is 36%. The average size of a new home has increased by something like 140 square feet since the crisis. If you look at the homebuilders, Toll Brothers has been seeing all the action, while the more diversified builders like D.R. Horton and Pulte are only recently beginning to focus on the first time homebuyer. Here are all sorts of fun facts about new construction, courtesy of the Census Bureau. This speaks to both sides of the income inequality debate that has been raging in Washington. If you are an aging baby boomer with assets, QE has been very good to you. If you are a Millennial, the results are mixed at best. You had a very narrow window to pick up a bargain in the real estate market and it closed very quickly. Now house prices are again over their skis relative to incomes. In fact, Bank of America is expecting slightly negative house price growth in 2017-2019 as income growth fails to materialize. What is a Millennial with a bunch of student loan debt to do? Go to Atlanta, Dallas, or Houston.


How do student loans impact potential home buyers and the housing recovery? A Department of the Treasury and Department of Education paper suggests, “Historically, society provided a significant subsidy to young people through the widespread availability of inexpensive public higher education. However, over the past several decades, there has been a substantial shift in the overall funding of higher education from state assistance, in the forms of grants and subsidies, to increased tuition borne by students.” Despite the debt burden from student loans, there are benefits to seeking higher education. The median weekly earning for a full-time, bachelor’s degree holder in 2011 was 64 percent higher than those for high school graduates. Education allows for gains in earning potential and increases the probability that individuals remain employed. Unfortunately, the cost of education has increased at a faster rate than the rate of inflation over the past decades as states have reduced funding for higher education, resulting in institutions relying on tuition to fund operations, therefore increasing the cost of college education. Comparing state aid for education from 1995 to 2012, the amount of state aid has increased for all races but the increase in tuition costs has been greater. Funding for higher education has shifted from the states to the federal government but in the form of student loans rather than grants that do not need to be paid back. This of course, has had a significant effect on the housing market, as young adults are delaying home buying due to being straddled by student loan debt. To read Wells Fargo’s full article, click here.


Penny Mac posted an announcement regarding changes to student loans and properties with solar panels.


Back on April 1st, Mountain West Financial began requiring all student loans, whether deferred, in forbearance, or in repayment (not deferred), the lender must use the greater of the following to determine the monthly payment to be used as the borrower’s recurring monthly debt obligation: 1% of the outstanding balance OR the actual documented payment (documented in the credit report, in documentation obtained from the student loan lender, or in documentation supplied by the borrower). If the payment currently being made cannot be documented or verified, 1% of the outstanding balance must be used.


Turning to the markets, the Greek people have said ‘no more’ to continued austerity. David Zervos with Jeffries immediately chimed in. “With a NO vote firmly in place, there are many more questions than answers. Will there be a forced restructuring of Greek banks? Will Greek depositors be bailed in as was suggested in the weekend press? Will the IMF recommendation of 50b in debt restructuring force German hands in a deal? Can any form of a cooperative deal ever take place between the Germans and the current Greek government? Will Greece be forced to leave the Eurozone? None of these questions are easy to answer – but the most important issue for markets near term will center on the banks. And my guess is that the NO result hardens both sides.”


But in an interesting plot twist, Greece’s outspoken finance minister Yanis Varoufakis has resigned, saying it was felt his departure would be helpful in finding a solution to the country’s debt crisis. Eurozone finance ministers, with whom he repeatedly clashed, had wanted him removed, Mr. Varoufakis explained. Now will Germany step in?


After the recent, and continuing, fireworks from Greece, things quiet down for scheduled news for the next five days. There are some odd, forgettable numbers today (Markit, ISM, labor market conditions). Tomorrow is some trade balance figures, Wednesday we’ll see the FOMC Minutes from the June 16-17 meeting, and Thursday is the usual Initial Jobless Claims. Looking back the yield on the riskless U.S. 10-year T-note ended Thursday at 2.39%. This morning the dollar has skyrocketed, stocks & oil prices are down, we’re down to a 10-year yield of 2.30% and agency MBS prices are better by .250.



Under “math trivia”, here’s a simple mathematical puzzle (“3x+1”) that has never been fully explained. Pick any positive number. Divide by 2 if the number is even. Multiply by 3 and add 1 if the number is odd. Repeat indefinitely and you’ll always, eventually, arrive at the number 1. It’s so simple that a 7-year old can understand it but mathematicians have hardly dented the problem.





(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