“Ladies, if your guy says that he is going to fix something, he means it. There is no need to remind him every six months.” Hopefully the government shutdown doesn’t last six months – there are plenty of other projects upon which to spend energy. So far the clear loser in the shutdown is USDA borrowers. Sure, they account for less than 2% of total origination volume (nationwide), but to many borrowers and LOs this is a major problem. Underwriters are having trouble with self-employed and government workers (due to the VOE). And as mentioned in a letter earlier this week, even with many aggregators temporarily waiving tax transcript requirements (the signed 4506-T is pretty much mandatory), lenders should remember that reps and warrants are still in place for the life of the loan.
Government shutdown or not, lenders are continuing to hire. I have been asked to assist a large Irvine-based California mortgage banker in its search for a Senior Vice President of Retail Sales to oversee the expansion of its corporate retail sales division and regional branch offices in the Southeastern US. Rated as one of America’s Top 100 Mortgage Companies in 2011 and 2012 by volume, the company is committed to its steady expansion. Reaching out to consumers nationwide from a central location in Orange County, the company has grown to be an industry leader in both the purchase and refinance markets for FHA, VA, Conventional, HARP2 & Jumbo Loans. Please submit confidential resumes to me at firstname.lastname@example.org.
New Penn Financial, one of the largest and most well-capitalized independent mortgage bankers in the country, is actively seeking production opportunities. Founded in 2008, New Penn is nationally licensed and originates agency and non-agency loan programs, providing opportunities for a wide spectrum of qualified borrowers. “The company is looking to add to its distributed retail network through acquisition, merger or joint venture. If you are a high performing retail business, we should talk.” For more information, visit www.newpennfinancial.com/acquisition or email Brian Simon, COO, at email@example.com. All inquiries will be kept confidential.
By the way, congrats to Texas! Apparently it is having a real estate boom. Not that it necessarily wants one: many residents were happy values never skyrocketed several years ago, and therefore never cratered, but values are definitely on the rise: http://www.bloomberg.com/news/2013-10-09/housing-boom-bigger-in-texas-as-home-bidding-wars-erupt.html.
Also, congrats to Freedom Mortgage. “Freedom Mortgage Corporation, a national mortgage lender licensed in 50 states, announced the closing of the initial public offering of 6,500,000 shares of common stock of its strategic alliance partner, Cherry Hill Mortgage Investment Corporation.” Here you go: http://www.marketwatch.com/story/freedom-mortgage-corporation-announces-closing-of-initial-public-offering-of-its-strategic-alliance-partner-2013-10-09?reflink=MW_news_stmp.
NMI Holdings, which provides private mortgage insurance, filed on Wednesday with the SEC to raise up to $25 million in an initial public offering. The Emeryville, CA-based company, which was founded in 2011 and booked $1.5 million in sales for the 12 months ended June 30, 2013, plans to list on the NASDAQ under the symbol NMIH. FBR Capital Markets is the sole bookrunner on the deal. No pricing terms were disclosed.
And Stonegate Mortgage Corp. plans to go public today with an initial stock offering on the New York Stock Exchange. “The Indianapolis mortgage company’s IPO could raise $156 million to $189 million, depending on share price and issued shares and whether it follows through with a secondary offering. The IPO pricing site IPOScoop.com values Stonegate’s offering at $180.6 million, based on as many as 8.6 million shares issued at $20 to $22 a share. The proposed stock ticker is SGM. Stonegate announced earlier this year it was planning an IPO, in part to help fund an ambitious expansion. The company had plans to expand its loan origination and servicing portfolio to every state, except Alaska and Hawaii, by the end of this year. The company said it originated $4 billion in loans in the first six months of the year and its loan-servicing portfolio is worth $7.6 billion. Its work force has grown to 652 people.
What does Treasury Secretary Lew, who will be testifying today, have to say on the five year anniversary of the financial crisis? Among many thoughts, expressed during a speech a couple weeks ago, he said, “As we finish the remaining elements of Wall Street reform this year, we must remember that financial reform is not about writing a set of rules and then walking off the field. We must remain vigilant and respond immediately to new risk in the financial system. Reforming Wall Street is ultimately about an enduring commitment to making our financial system a model of stability and safety that contributes to job creation and economic growth.” No disrespect to the Secretary, but with an ‘act, and let the legal department handle it’ mentality, I wonder if Wall St. even cares? But the CFPB sure does….
We have another data point besides Castle & Cooke regarding CFPB actions against lenders. The Consumer Financial Protection Bureau ordered Mortgage Master, Inc. and Washington Federal to pay civil penalties for violating the Home Mortgage Disclosure Act (HMDA), which requires certain mortgage lenders to accurately collect and report data about home mortgage loans. Mortgage Master will pay $425,000 and Washington Federal will pay $34,000 in civil penalties. It is important that mortgage loan information under HMDA is accurate!
“When financial institutions report inaccurate information, it obstructs the purpose of the Home Mortgage Disclosure Act and makes it more difficult for the CFPB to discover and stop discriminatory lending,” said CFPB Director Richard Cordray. “Today we are sending a strong signal that no mortgage lending institution – whether bank or nonbank – should be able to mislead the public with erroneous data.”
The CFPB’s bulletin went on, “The Bureau reviews the accuracy of HMDA data and assesses compliance programs as part of its supervision of both banks and nonbanks. To date, the Bureau has conducted HMDA reviews at dozens of mortgage lenders, both bank and nonbank, and has found that many lenders have adequate HMDA compliance systems, resulting in HMDA data with no errors or very few errors. In its HMDA reviews conducted at Mortgage Master and Washington Federal, however, the CFPB found that their compliance systems were inadequate and that they had severely compromised mortgage lending data.
“According to the CFPB’s Consent Order, a CFPB exam found that Mortgage Master, a nonbank headquartered in Walpole, Mass., had significant data errors in the 21,015 mortgage loan applications it reported for 2011. The Bureau collaborated closely in its subsequent investigation with the Commonwealth of Massachusetts Division of Banks, which had also identified significant error rates in Mortgage Master’s HMDA filings. The CFPB’s Consent Order is concurrent with a Consent Order from the Commonwealth of Massachusetts Division of Banks. The CFPB is requiring Mortgage Master to pay a civil penalty of $425,000, correct and resubmit its 2011 HMDA data, and develop and implement an effective HMDA compliance management system to prevent future violations.”
Over at Washington Federal, “According to the CFPB’s Consent Order, a CFPB exam found that Washington Federal, a bank headquartered in Seattle, Wash., had significant errors in the 5,785 mortgage loan applications it reported for 2011. The CFPB is requiring Washington Federal to pay a civil penalty of $34,000, correct and resubmit its 2011 HMDA data, and develop and implement an effective HMDA compliance management system to prevent future violations. Since the CFPB’s discovery of the inaccuracies, both entities have been taking steps to improve their HMDA compliance management systems and the accuracy of their HMDA mortgage loan information.”
The Mortgage Master Consent Order can be found at http://files.consumerfinance.gov/f/201310_cfpb_consent-order_mortgage-master.pdf, the Washington Federal Consent Order can be found at http://files.consumerfinance.gov/f/201310_cfpb_consent-order_washington-federal.pdf, the CFPB’s HMDA Bulletin can be found at http://files.consumerfinance.gov/f/201310_cfpb_hmda_compliance-bulletin_fair-lending.pdf, and the CFPB’s HMDA Resubmission Schedule and Guidelines can be found at: http://files.consumerfinance.gov/f/201310_cfpb_hmda_resubmission-guidelines_fair-lending.pdf.
There is a lot on every mortgage company’s plate, but speaking of regulations, one often overlooked aspect of Dodd Frank is Section 342 – Minority and Diversity Inclusion. Craig Chapman, founder of Salataris, recently attended a roundtable discussion spearheaded by Congresswoman Maxine Waters to discuss the fair inclusion of minority and women owned businesses within the financial services sector. “Congresswoman Waters pressed each government agency Office of Minority and Women Inclusion Director (OMWI) as to when are we going to see greater enforcement of laws already enacted. Specifically she was referring to Section 342 of Dodd-Frank (http://www.fdic.gov/regulations/reform/dfa_selections.html#9).” So, when you begin to assess your vendor relationships, bear in mind that you should consider the fair inclusion of minority and women owned businesses, because chances are that your regulator is looking for it. (For more information on increasing your supplier diversity initiatives, email firstname.lastname@example.org, a company that, among other things, focuses on this.)
“Rob, we hear all about fraud with mortgage brokers and lenders. But we rarely hear anything about title companies and other settlement providers. Are they squeaky clean?” Unfortunately no they’re not. Here is the latest article that I saw on the topic: http://articles.latimes.com/2013/sep/27/business/la-fi-lew-20130929.
In training and events news, the New Mexico Mortgage Lenders Association will be holding its October luncheon on Thursday the 10th at the Albuquerque Country Club, where the focus will be on legal and compliance issues. To register, go to http://nmmla.com/ai1ec_event/nmmla-august-luncheon/?instance_id=.
John Robbins of Coester VMS will be leading a webinar on October 15th that will discuss the long-term implications of recent regulatory and interest rate changes on the mortgage market, including where lenders can source capital, how to transition to a rising purchase market, developing scorecards for third-party vendors and investors, and evaluating the risks of servicing retention. Registration is available at http://coesterappraisals.us2.list-manage.com/track/click?u=ffbcf165a9b8124c08948a062&id=12b16775a3&e=c8565002c4.
The Ohio Mortgage Bankers Association is hosting a two-day VA underwriting training session in Cincinnati on October 15th and 16th. Processors, loan officers, and managers are encouraged to attend along with underwriters. Contact email@example.com to register.
The Colorado Mortgage Lenders Association is holding a CFPB Readiness seminar in Denver on October 17th. QM, QRM, Ability to Repay, LO comp, and Fair Lending are all on the agenda. To register, see http://cmla.us4.list-manage1.com/track/click?u=803a688e0b5be37514384edf0&id=f1ef934168&e=f000b94adb.
Yesterday the MBA, which is obviously open during the shutdown, said that the refinance share increased to 64% of total applications from 63%, and the ARMs were unchanged at 6% of total applications. (Many are puzzled that the ARM share has not increased noticeably, given the relative low rates of the intermediate ARM lineup. Apparently borrowers are still enamored with the 30-yr. fixed rate.) For the folks out there that love numbers, the average 30-year fixed-rate mortgages with conforming loan balances fell to 4.42% from 4.49%, jumbo rates slid to 4.45% from last week’s 4.53%, and the FHA average rate decreased to 4.15% from 4.21% last week. The average 15-year rate slid to 3.52% from 3.55% last week. The 5/1 ARM average edged down to 3.25% from 3.26% a week earlier.
Once again, rates didn’t see much volatility Wednesday. Folks are watching rates teeter-totter between a) prices going up, and rates down, due to the continued Fed buying, and b) the potential of prices going down, and rates up, when they resolve the budget issue. Meanwhile, MBS trading volume was well below normal at 75 percent of the 30-day moving average. The release of the Fed minutes was really not enough to move the market much, and while the minutiae of the verbiage provided some insight, overall it was much ado about nothing.
Thursday has another active calendar with two particularly key events: Initial Claims and testimony from Treasury Secretary Jack Lew on the debt limit before the Senate Finance Committee. Initial Claims (+310k versus +308k previously) will be released at 8:30 a.m. and its importance may be especially elevated given that the September employment situation has been delayed due to the government shutdown. Meanwhile, the Senate hearing on the debt limit begins at 8AM EDT, and we’ll have a $13 billion 30-year bond auction. The good ol’ 10-yr closed Wednesday at a yield of 2.65% and in the very early going Thursday it has moved higher to 2.69%, and we can look for agency MBS prices to worsen by about .125.
(Speaking of the standoff in Washington…)
Passengers on a small plane are waiting for the flight to leave. They’re getting a little impatient, but the airport staff assures them the pilots will be there soon, and then the flight can take off.
Finally the entrance opens, and two men dressed in pilots’ uniforms walk up the aisle. Both are wearing dark glasses, one is using a guide dog, and the other is tapping his way along the aisle with a white cane.
Nervous laughter spreads through the cabin, but the men enter the cockpit, the door closes, and the engines start up. The passengers begin glancing nervously around, searching for some sign that this is just a little practical joke. None is forthcoming.
The plane moves faster and faster down the runway, and the people sitting in the window seats realize they’re headed straight for the water at the edge of the airport territory.
As it begins to look as though the plane will plow into the water, panicked screams fill the cabin. At that moment, the plane lifts smoothly into the air.
The passengers relax and laugh a little sheepishly, and soon all retreat into their magazines, secure in the knowledge that the plane really is in good hands.
Meanwhile, in the cockpit, the pilot turns to the co-pilot and says, “You know, Jim, one of these days, they’re gonna scream too late and we’re all gonna die.”
Copyright 2013 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.)