Mar. 24: Retail jobs & CS layoffs; trends in private mortgage insurance; disaster policy updates; why borrower early payoffs matter

Recovery from the housing crisis has been different in almost every community throughout the U.S. Some places have fully recovered, while others continue to struggle. One major factor in this recovery is the difference in foreclosure laws (judicial vs. non-judicial) from state to state. Pro Teck Valuation Services’ Home Value Forecast recently analyzed the impact these foreclosure laws are having on the U.S. Housing Market—particularly in the communities of Phoenix, AZ and Cleveland, OH. Obviously servicers are more interested in a fast, straightforward process in the event of foreclosure rather than a long, drawn-out process – and that also impacts the value of servicing.


New American Funding’s continued growth is driving the need for expansion in its Tustin Corporate location for several positions including an experienced Project Manager, Social Media Manager, Data Analyst and more. The company is committed to its steady expansion reaching out to consumers and real estate partners nationwide and is in need of experienced and licensed loan officers for both its retail branches across the nation and regional call centers in Tustin, CA, Riverside, CA, Plano, TX and Southfield, MI. New American Funding has been rated as one of America’s Top 100 Mortgage Companies by Mortgage Executive Magazine for six years in a row.  Please submit resumes to Jennette Landrum with “Chrisman” in the subject line or call New American Funding at 877-478-5476.


On the flip side Credit Suisse Group CEO Tidjane Thiam said the bank will be reducing expenses further and cut 2,000 more jobs from its Global Markets division as the lender faces a 40% to 45% drop in trading revenue and $258 million in write-downs in the first quarter. Thiam said he had been unaware of an increase in holdings of distressed debt and other illiquid positions that triggered many of the bank’s first-quarter losses.


Politico reports that Michael Stegman is expected to depart the White House tomorrow, and his reason for leaving and plans for replacement are unclear. Who is Michael Stegman? He was/is President Barack Obama’s top housing finance official, working on issues related to Fannie Mae and Freddie Mac.


As the private mortgage insurance companies march toward better prices for higher credit score loans and worse pricing for lower credit score loans (thus pushing business toward FHA), let’s see what they’ve been up to lately.


MGIC (MTG) reported monthly operating statistics for February. New notices were down 3.9% Y/Y, and the ending delinquent inventory was down 4.0% M/M and down 20.2% Y/Y. (In February 2015, new notices were down 23.8% Y/Y and down 27.4% M/M.) Insurance in Force (IIF) came in at $174.9 billion, flat with $174.9 billion reported in January. February delinquency trends and IIF growth were largely in line with expectations. Cures of 6,748 were up 26.6% M/M vs. a 1.4% increase in January and a 48.8% increase in February 2015. The cure ratio increased to 124.5% from 80.6% in January. This was down from 154.7% in February 2015. Paid claims rose 5.3% M/M versus a decline of 0.6% in January and a decline of 7.1% in February 2015.


Genworth Mortgage Insurance Corp. plans to change its pricing structure for borrower-paid policies. Yes, Genworth announced that it has standardized and simplified for customers its Borrower Paid Mortgage Insurance (“BPMI”) premium structure. Genworth’s updated rate card features reduced rates across all loan-to-value ratios for borrowers with credit scores of 740+ and results in weighted-average rates that are consistent with its existing card given the current mix of business. The changes also enable Genworth to remain competitive with government-backed insurance provider, the Federal Housing Administration (“FHA”). Genworth’s new pricing takes effect April 4, 2016, additional information is available.


Genworth Mortgage Insurance has forged an exclusive partnership with Roostify, a web and mobile platform that streamlines and accelerates the home buying process. Roostify’s platform gives consumers the power to submit a complete and accurate application in under 20 minutes, allowing loan officers to spend more time focused on closing loans rather than searching for information and documents.  It also serves as a networking tool, allowing for interaction among loan officers, real estate agents, underwriters, and consumers all in one digital hub. The full press release is available here.


Good news for the state of Georgia: Arch MI RateStar is now approved and available.


AIG, American International Group and parent of UG, continues to be under pressure from activist investors announced it will cut 242 jobs at five locations in New York City. CEO Peter Hancock, under pressure by activist investor Carl Icahn to shrink the company and improve profitability, has been reducing costs by eliminating jobs and shifting thousands of positions to less expensive locations outside of New York. He told investors in November that he planned to dismiss almost a quarter of the top 1,400 members of senior management, and told staff not to count on lifetime employment. He said about 2,000 jobs annually were being moved to low-cost centers. Apparently something is needed: AIG shares have fallen 13 percent this year, compared with the 0.6 percent advance of the Standard & Poor’s 500 Index.


United Guaranty announced the introduction of its MI NOW mobile phone app, one way to obtain a rate quote with the benefits of Performance Premium pricing. (The free download for iPhones is now available to United Guaranty MI Guide users at the Apple App store.) United Guaranty worked with loan officers to incorporate a host of flexible features within the MI NOW app, including: providing a rate quote with six required fields (and the flexibility to submit additional information). UG also continues to spread the word about its Secure Quote: the MI rate will not increase for 90 days unless the loan changes materially. It enables users to send the quote to their email account and receive a PDF to share and keep for their records. Users can edit their current rate quote on the mobile app or access their submitted rate quotes through MI Guide to submit a new application.


Radian announced it has commenced a debt offering of $325 million principal amount of senior unsecured notes that mature in 2021. The company expects to use the proceeds to repurchase its convertible notes due in 2019, as well as potentially repurchasing common stock and convertible notes due in 2017. One can expect the offering to be accretive to EPS estimates and to reduce book value slightly.


The bad weather around the U.S. continues to push lenders to remind clients of their disaster policies.


In regard FEMA’s announcement regarding individual disaster assistance for 26 Louisiana Parishes due to severe storms and flooding beginning on March 8, 2016, until an incident end date is declared, AmeriHome will require re-inspections for all properties in the affected parishes, irrespective of appraisal date. Also noteworthy, AmeriHome is changing the requirements for events of default and for remedies related to Early Payment Defaults (EPDs) and Early Payoffs (EPOs). Changes are effective for loans with commitments dated on or after 4/15/2016.


The New Jersey severe winter disaster, incident period of January 22, 2016 to January 24, 2016, was declared a major disaster on March 14, 2016. All jurisdictions in New Jersey are eligible to apply for assistance with Bayview Loan Servicing under the Hazard Mitigation Grant Program.


In response to the Flooding in Louisiana and in anticipation of a Federal Disaster Declaration, M&T Bank will enforce the Disaster Re-inspection Policy for all properties located in the affected counties.


At this time, Pacific Union is imposing Disaster Area Policy requirements for properties located within all impacted areas of Arkansas.


First Community Mortgage also alerted its clients: Please reference Wholesale Product and Pricing Bulletin 2016-5 FEMA Disaster Counties Update for an announcement regarding updated disaster counties.


Resitrader, Inc., a Calabasas, California-based provider of whole loan mortgage trade management software, announced that over $100 million of mortgage loans were traded on the company’s whole loan platform in February, the first month of live trading.  “12 financial institutions completed 24 trades in February,” said John Ardy, CEO of Resitrader. This is a secure platform that automatically normalizes loan data so loan buyers can easily search by investment criteria and loan type. Resitrader also makes it simple for buyers and sellers to communicate in real time, notify each other of loan pools they wish to trade, exchange loan data, documents and pricing information, and settle transactions.  The platform enables users to directly integrate their pricing tools, loan origination systems and service providers.


Even though Quantitative Easing (QE) has officially ended, folks need to keep in mind that the Federal Reserve, through its desk in New York, continues to purchase agency mortgage-backed securities (MBS). It uses the money from mortgages that pay off in its portfolio – kind of like dividend reinvestment. And since mortgage rates are determined by supply and demand, the Fed’s demand for MBS is carefully watched – especially as it ranges around $1.5-2 billion a day!


And thus we all watch interest rates as a gauge for refinancing activity – even though fewer and fewer borrowers want to go through the hassle of refinancing to save $80 a month. And the market watches the MBA’s Wednesday application index as a reflection of what might be coming down the pipe 30-60 days from now.


Traders also watch prepayment speeds. These are projected to jump in March due to a higher number of collection days and increased refinancing activity in response to lower mortgage rates. More refinancing leads to more purchases from the Fed.


Month to date gross issuance stands at $79.3bn; 37.8% in GNMAs, 36.6% in FNMAs, and 25.6% FHLMCs. Supply is now on track to reach $85 billion area versus a previous estimate of roughly $77 billion as it picked up over the past week. Paydowns are estimated at $86 billion, which would result in flat to slightly positive net issuance. In February, paydowns totaled $68.5 billion with net issuance at +$8.8 billion. With the home buying season getting underway, net supply is anticipated to increase with Ginnies in particular expected to feel the brunt.


Make no mistake about it, negative interest rates are an act of desperation, a signal that traditional policy options have proved ineffective and new limits need to be explored. They punish banks that hoard cash instead of extending loans to businesses or to weaker lenders. This is an important point. Central banks in Europe have placed a transactional cost of sitting on money in an attempt to force investments in a shaky economy. Has it worked, should it work, will it continue to work? All great questions. In the words of ‘80’s anti-hero Gordon Gecko, “money never sleeps, pal.” In the never ending chase for yield Bloomberg notes, “Norway’s biggest life insurer is stepping up investments in direct loans as a way to escape negative interest rates. Storebrand ASA has a “strategic intention” to buy more asset-backed loans and bank syndicate loans, according to the insurer’s asset management chief….the loan market offers us an opportunity to get a higher running yield than in the bond market.”


Up some, down some, so go rates. Wednesday they headed lower with about as much conviction as they headed higher Tuesday. New home sales for February (512K) were reported to be a hair above estimates, and the median sales price shot up over 6% to $301k.


Today, besides an early close in the bond market (it is closed entirely tomorrow) we’ll have Initial Jobless Claims for the week ending 3/19 and Continuing Jobless Claims for the week ending 3/12, as well as February Durable Goods Orders – both at 7:30AM here in Chicago. We wrapped up Tuesday with the 10-year’s yield at 1.88% and in the very early going this morning we’re at 1.87% with agency MBS prices better by a smidge – a very technical term.



Redneck Engineer Exam (Part 3 of 3, received from a friend in North Carolina)

I am sick and tired of hearing about how dumb people are in the South, so I challenge any so-called “smart” Yankee friends to take this exam.

  1. A 2-ton truck is overloaded and proceeding 900 yards down a steep slope on a secondary road at 45 MPH. The brakes fail. Given average traffic conditions on secondary roads, what is the probability that it will strike a vehicle with a muffler?
  2. With a gene pool reduction of 7.5% per generation, how long will it take a town, which has been bypassed by the Interstate, to breed a country-western singer?

I betcha thought that this test was gonna be an easy one, didn’t ya? It’s okay if y’all didn’t do all that well. Just goes to show ya there’s a whole heap of things that big city book-learning don’t prepare ya for in this life. As an added bonus for taking the “RED NECK CHALLENGE,” here’s some southerly advice that may come in handy down the road a piece………..

Next time you are too drunk to drive, walk to the nearest pizza shop and place an order. When they go to deliver it, catch a ride home with them.





(Copyright 2016 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