Mar. 2: Production jobs; private MI updates; trends in fast growing rental markets & gentrification

Lenders everywhere are excited about great volumes in February, but fans of children may know that Massachusetts’ Theodor Seuss Geisel was born on this day in 1904. It reminded me of an old Massachusetts resident told an associate of mine, “In the summer we farm and we *&^%. In winter we don’t farm.” I don’t think Dr. Seuss would have approved, but would have found a good rhyme for it…


Returning to business news, Guild Mortgage is growing with its recent acquisition of Comstock Mortgage in Northern CA. Guild’s new team brings to Guild a new talented regional ops center and management team in Sacramento to support the growth of their new inland region, from Fresno through to the north bay up to the OR border. The new team is looking for talented Area managers in the North Bay and Fresno markets. They are also looking for top producing branches throughout CA. Please contact Craig Sardella 916-768-7000 to hear more about what Guild has to offer.


A few thousand miles away Caliber Home Loans is continuing to expand and is hiring highly skilled Branch Managers and their teams as well as individual LOs in Alabama, Mississippi, Louisiana, Tennessee, Arkansas, North Carolina, South Carolina and Georgia. “If you can imagine a mortgage company where sales are the main focus, marketing is robust and plentiful, servicing is retained and leadership listens… You have just imagined Caliber Home Loans, Inc.  Caliber Home Loans is dedicated to providing their sales force with the most cutting edge sales tools, marketing and customer retention platform in the industry. With a servicing portfolio of over $60 billion and growing, a fulfillment team committed to getting your loans closed quickly and accurately, and the recent acquisition of Cobalt Mortgage, Caliber Home Loans is primed and ready for major growth in 2015.” Contact Bobbi Jo Wiggins, Senior Sales Recruiter, for a confidential conversation or interview.


And PRMG recently announced the opening of 9 New Retail Branches in the West, Midwest, Northeast, Southeast and New England territories. Starting with the Midwest region, PRMG hired several new branch managers: Pargat Grewal, to oversee the new Farmington Hills, MI office, Blaise Dietz to head up the Troy, MI location, Victor Manganiello, to head up the new Woburn, MA branch, Oscar Navarro to oversee the new Manassas, VA office, Cindy Moore to head up the new Franklin, TN branch, and Maria Reilly will head up the new Ft. Lauderdale, FL office.  All six of these new retail branches will report directly to Chris Sorensen, PRMG Director of Mergers and Acquisitions. In the western region, PRMG added three new retail branches in California: Brentwood and San Ramon (headed up by Wendy D’ Ambrogia) and Victorville (led by Frank Castanos). All three of these new CA branches will report directly to Yong Choi, PRMG Regional Manager. PRMG is a national leading lender ranked No. 2 of the 50 Best companies to work for in America. To learn more about PRMG contact Paul Lucido, National Marketing Director. Inquiries and/or questions about other markets please email


National MI recently added a Homebuyer Education course to its offerings. This online course will help first-time homebuyers navigate the home buying process, from how to qualify for a mortgage at affordable terms, to where to find a homebuyer assistance program. Upon completion, the borrower will receive a HBE certificate, which is a requirement with the recent expansion of 97% LTVs.


Not only did Wells Fargo recently approve Arch MI, but ARCH announced the launch of Arch Mortgage Guaranty Company (“AMG”). In tandem with this launch, Moody’s Investors Service has issued Arch Mortgage Guaranty an insurance financial strength (IFS) rating of ‘A3’—their highest IFS rating within the U.S. mortgage insurance Industry.


In January NYCB Mortgage Company began offering Arch MI as an additional mortgage insurance option. NYCB offers MI options from the following mortgage insurance companies: MGIC, Radian, Essent Guaranty and Arch MI. Underwriting guidelines for each partner can be reviewed from WSL: 619 Competitive Analysis of Mortgage Insurance Guidelines.


MGIC posted new Premium Rates for the State of Washington. New borrower-paid and lender-paid premium rates will be effective in the State of Washington for MI applications received on or after March 1, 2015. Rate cards are posted on its website.


Arch Mortgage Insurance Company (Arch MI) announced changes to its EZ Decisioning, Standard Conforming and Non-Conforming, and Construction-to-Permanent Program Guidelines. Guidelines are available on its website, Credit Risk Bulletin #1-15-NR.


Flagstar’s Informed Consumer Choice Disclosures (Doc. #9308-A and Doc. #9308-B) have been updated to reflect the annual mortgage insurance premium expiration policies effective for case numbers assigned on or after January 26. Effective for new applications dated on or after January 30, 2015, the updated form must be provided to the borrower no later than three days after application.


“Rob, I run mortgage for a bank, and our regulators are telling us that the Fed has spelled out guidelines on rates, prices, and discount points. Have you seen any official guidance on the topic?” No, I have not seen anything official, nor any precedent set. I have heard, however, of overlap between the CFPB and bank examiners’ jurisdiction, and of regulators being concerned about “unearned discount points”. Here’s some unofficial guidance from the Fed which begins with, “When pricing mortgage loans, many creditors offer borrowers the option of obtaining a lower interest rate by purchasing discount points. These points, paid in an upfront lump sum, lower the amount of interest paid over the life of the loan. Generally speaking, each discount point costs 1 percent of the total loan amount and usually lowers the interest rate by 25 basis points. For example, for a $200,000 mortgage loan with a 5 percent par interest rate, two discount points would cost $4,000 and would lower the interest rate by 50 basis points, to 4.50 percent.”


“Rob, are you seeing any trends out there among originators and in the industry in general?” Geez, where do I start?


That is really LO and company dependent, but rates are still very good and I am seeing LOs contact every FHA borrower they know that does not have enough equity to refi into a conventional loan. The LOs are saying that between the lower rates and the lower monthly MIP it really makes financial sense to do a streamline FHA refi. FHA Streamline refi’s require that the borrower lower their payment by at least 5% to be eligible for a streamline refi, there is no appraisal required, and very minimal documentation. There is one condition that could kill a streamline very quickly, if the borrower has had a late mortgage payment within the past 12 months.


Quicken Loans came out with their Home Price Perception Index (HPPI) and Home value Index (HVI) for the month of January. Appraisers’ home value opinion is only 0.18 percent greater than homeowners, which is a significant improvement from last month, when the HPPI was 1.43 percent. This indicates that the gap is narrowing between homeowners’ home value opinions and appraisers’ opinions. The gap between appraiser and homeowner opinions narrowed from December to January in 66 percent of the metro areas analyzed but appraisers in more than 74 percent of the metro areas measured have higher opinions of home values than homeowners. Unlike the HPPI, the January Home Value Index (HVI) increased from the previous month to 1.95 percent, with home values up 5.63 percent on a yearly basis since last January. Every region measured by Quicken Loans saw a gain in home value. The Midwest had the largest gain, with home values seeing a monthly growth of 2.62 percent and a 9.31 percent annual home value growth. To read more about Quicken Loans’ press release, click here.


Governing has recently analyzed the extent to which gentrification has reshaped urban communities, by examining the 50 largest cities within the U.S. Gentrification is when a neighborhood has grown and developed thus inadvertently catering to more affluent residents, resulting in increased home prices and displacing longtime residents. Governing found that about 20% of low-income neighborhoods and home values have gentrified since 2000, compared to only 9% in the 1990s. Gentrification is not as common on a national scale, as only 8% of all U.S. neighborhoods have experienced gentrification since 2000. For Governing’s report, an initial test determined a tract was eligible to gentrify if its median household income and median home value were both in the bottom 40th percentile of all tracts within a metro area at the beginning of the decade. From the analysis, Portland, Oregon is the most gentrified city in the U.S, as 58% of Portland’s low income neighborhoods gentrified in 2000, the highest rate of any city reviewed.  Gentrification began in the early 1990s in Portland and continues today. Northeast Portland in particular, is now one of the main cities most populated by young professionals. The drawback of gentrification means that cities are under pressure to maintain housing affordability and diversity within their communities, and many residents have been displaced, moving to outlying communities. There are distinct characteristics of gentrifying neighborhoods, as many neighborhoods that have gentrified since 2000 recorded an increase in population and the share of non-Hispanic white residents increased as well. Low-income neighborhoods that did not gentrify experienced minimal population growth and an increase in minority residents. To read more about Governing’s article, click here.


The top five fastest growing rental markets for January included Denver, CO, Kansas City, MO, Nashville, TN, Portland, OR and Charlotte, NC. In the past, U.S. renters making the national median income would put 25 percent of their income towards rent, but renters can now expect to allocate about 30 percent of their income towards rent. This has a negative implication for those looking to buy, as potential homebuyers have to direct more of their income towards living expenses rather than saving for a down payment. Median rent rose 3.3% YoY in January to a Zillow Rent Index of $1,350. The metro areas with the largest annual gains in rents were San Francisco (14.9 percent), San Jose (13.4 percent), Denver (10.2 percent), Kansas City (8.5 percent) and Portland (7.2 percent). Most economists and real estate experts surveyed by Zillow (51 percent) said rental affordability will continue to be on the decline for the next two years. In most areas, the rate of rental appreciation exceeded home value appreciation in the last year. Apart from rising rent prices, median U.S. home values in January grew 0.2 percent from December and 5.4 percent YoY to a Zillow Home Value Index of $178,500, but are still 9.1 percent below the peak in April of 2007. The number of homes listed for sale on Zillow also increased 9.3 percent YoY in January but was down from December. For more information on Zillow’s article, click here.


In the markets we’ve learned that U.S. banks hold about $2 trillion in US government and agency bonds as Basel III changes drive an investing shift among the largest banks in the industry. US banks have increased their purchases for 16 straight months and now hold the highest level of such bonds since 1973.


In addition on Friday we found out from NAR that Pending Home Sales rose in January to their highest level in 18 months. Weather-be-damned, improved buyer demand at the beginning of 2015 pushed pending home sales in January to their highest level since August 2013. All major regions except for the Midwest saw gains in activity in January. But most of last week’s yammering was focused on Fed Chair Janet Yellen’s testimony to both houses of Congress.  Her remarks indicated that the word “patient” would be removed from the press release prior to the meeting when the fed funds rate is actually increased. Is it any surprise that a rate hike is “data dependent?” In addition, the Fed seems set to look through the recent weakness in inflation. Yellen said that the Fed could raise rates as long as it was “reasonably confident” that consumer inflation would reach its 2 percent objective in the medium term.


Yup – it is March already, and many lenders seem to have set February volume records. And we have a heckuva lot of scheduled news here in the U.S. – and with Europe seeming to be quiet some of this may just move market. Today we have Personal Income and Consumption/Spending along with some Personal Consumption Expenditure numbers that I can never keep track of. We will also have Construction Spending and a set of Institute of Supply Management (ISM) figures. Tuesday is a breather, aside from my Dad’s 92nd birthday, and then Wednesday is ADP’s private payroll figures along with the Beige Book in the afternoon.  Thursday the 5th is Challenger job cuts, Nonfarm Productivity, and Initial Jobless Claims. And then Friday is the usual set of employment data with the usual set of people pointing out the statistical problems with the numbers: the Unemployment Rate, Nonfarm Payroll, and Hourly Earnings. We ended Friday with the 10-yr at 2.00% – easy to remember – and this morning we’re at approximately unchanged on rates and agency MBS prices.



It’s March with St. Patrick’s Day! Here you go: a clip about Guinness and “Superb herding abilities.”





(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