Oct. 24: Guild buys Northwest; update on Chase lawsuit & more potential buybacks; upcoming events and trainings

It is the end of the week, and here is something totally unrelated to mortgages. (No, most of us don’t change our clocks until next weekend.) This piece of trivia – about the creator of Pringles being buried inside a Pringles can – will come in handy at tonight’s Happy Hour. See? And you claim you never learn anything from this commentary…


According to Zillow Real Estate Research, home ownership rates among millennials have declined over the past four decades mainly due to changing family structures. Zillow honed in on marital status and employment rates to determine how many young adults are purchasing homes. Its staff found that the homeownership rate is above historical levels for young married couples that are engaged in full time employment, as well as single young adults working full time – but has declined since the recession. The homeownership rate has declined over the past four decades among married couples, where only one spouse is working full time and the other is unemployed. The homeownership rate among married couples where one spouse is working full time and the other spouse is working part time has slightly declined over the past decade whereas there is no difference in the homeownership rate for young adults who are single and work part time or are unemployed.


Dave Savage writes, “Millennials are one of the hot topics lately in the real estate industry. Born between 1980 and 1994 they will make up half of the nation’s workforce by 2020. Coming from MBA Las Vegas two of the best educational resources equipped to help you understand the millennial opportunity are the proven leaders at Re:SourceTV and Mortgage Coach.  “Getting Ahead of the Millennial Takeover” is a 5 minute video sharing important considerations to have in mind when talking to this key demographicClick here for the video.”


In looking at the latest news coming from the repurchase trenches, James Brody with the American Mortgage Law Group reports that, “While the goliaths of the mortgage lending market have been entering into colossal settlements, we may be seeing an even more expanded universe of put-back demands at a great cost to originators who are unfortunately left exposed to the settled repurchase liabilities. News is that JPMorgan Chase is now attempting to enter into a settlement where it would pay $4.6 billion to resolve reps and warrants claims related to 330 residential mortgage-backed securitization trusts. The proposed settlement, now before the Supreme Court of the State of New York, County of New York, Case No. 652382/2014, contains a clause that states that, “Claims against third-parties, unaffiliated by JPMorgan, related to the origination and/or sale of Mortgage Loans securitized by the JPMorgan Trusts are not released. To the extent that JPMorgan elects to pursue any third-parties, unaffiliated with JPMorgan, for recovery based on the Released Claims related to the origination and/or sale of Mortgage Loans securitized by the Bear Stearns Trusts, the Accepting Trustees agree to use commercially reasonable efforts to assist such pursuit.” Therefore, originators of the loans at issue may see a number of demands coming down the road, in the vein of the current RFC litigation in Minnesota and New York.  Along those lines, the New York Court has ordered that anyone having an interest in the residential mortgage-backed securitization trusts at issue, who wishes to be heard in support of or in opposition to the Settlement show cause before the Court on December 16,  why an order should not be issued granting judgment in favor of a number of the trustees.  Any objection to the proposed settlement agreement or request to intervene must be filed and served on or before November 3.  Any potentially interested person who fails to object in the manner required shall be deemed to have waived the right to object.”  If you are one of the many lenders that may have an interest in the proposed Settlement and would like to learn more about these issues, you can contact AMLG’s Managing Member, James Brody.


The Community Mortgage Lenders of America (CMLA) is gaining visibility in Washington these days. A lender delegation, led by CMLA’s new Chair, Paulina McGrath, President of Republic State Mortgage Co. met with White House and Interagency staff last week to discuss ways to expand the availability of mortgage credit for moderate income, minority, single parent and first time buyers. The CMLA called for a change in GSEs loan review process to reduce rote repurchase demands for non-threatening loan flaws. Indemnification, rather than repurchase, should be the first option for more serious loan issues, where the loan is still performing. The lenders echoed the concerns of many – that the high level of current FHA mortgage insurance premiums is a barrier to moderate income, minority, single parent and first time borrowers. They urged a reduction in the current level of GSE guaranty fees and loan level pricing adjustments (LLPAs) as well as abolition of the across-the-board adverse markets fees currently levied by the GSEs.


The big keep getting bigger. Guild Mortgage announced the acquisition of Northwest Mortgage Group, a Portland-based independent mortgage banking company with eight branches, more than 150 loan officers and support staff, and $842 million in loan volume in 2013. (That’s about $6 million for the year per FTE.) With the acquisition, Guild becomes the market leader in Portland. Guild Mortgage currently has more than 200 branch and satellite offices in 23 states and generated loan volume of $7 billion and servicing volume of $13 billion in 2013.


“Rob, we have communicated about impending mortgage industry consolidation on a few previous occasions. After a quiescent period from 2011 through 2013, M&A activity in our industry is reaching a level not experienced in over a decade.  The Guild-Northwest deal is further evidence of this consolidation trend; it is scheduled to close around the first of November. STRATMOR represented the Northwest shareholders.  As such, we have a couple of observations which provide some insight into current M&A market dynamics.  Northwest Mortgage Group is an outstanding mortgage bank with an exemplary performance track record and an excellent regional reputation for quality and integrity.  As a result, there were a substantial number of investors who considered this acquisition opportunity. The Northwest shareholders selected Guild Mortgage based on their perception of the most compatible cultural fit. Although corporate culture is certainly the most intangible element in the assessment of an acquisition, it’s also THE most critical success favor.


“Another factor which influenced Guild’s decision was Northwest’s “production momentum” which is best measured in terms of market share. Northwest has been the purchase business market share leader in the Portland MSA for the last several years.  The combination of Northwest and Guild will represent a powerful origination machine in the Oregon marketplace during 2015 and beyond.


“Within the MBA/STRATMOR Peer Group Program, Guild Mortgage has consistently been among the top performers over several years. Therefore, the acquisition synergies which Guild enables will significantly improve Northwest’s already strong financial performance.


Jeff’s note wraps up. “There is a plethora of factors which drive the assessment and negotiation of a mutually attractive acquisition. But corporate culture, production momentum and financial synergies stand out as key drivers in a successful deal.  Whether your perspective is that of a motivated buyer or prospective seller, these factors are integral to how you formulate your value proposition in today’s M&A environment.” (Certain principals of STRATMOR are licensed investment banking agents of M&A Securities Group, Inc., an unaffiliated company.)


What kind of events and training do we have coming up? Well…


On the heels of the Las Vegas conference the MBA has the Independent Mortgage Bankers Conference. It is the only event focused solely on the IMB, December 3-5 at the Hotel Del Coronado in San Diego. The reviews were fantastic on last year’s event. This year will be even better especially with our Chairman being an IBM CEO himself! “Let’s make a loud statement that focus and specific, and tested, expertise is the most important form of capital! A great location and more.”


MBA accounting and financial management conference, November 19th-21st, includes Informative General Sessions, PLUS 14.5 CPE Credits.


Join MBA Saint Louis November 6th for its general membership meeting and special presentation recognizing the recipients of “Homers for Homeless.” The evening will include an inspirational presentation by local advocate and athlete, Teri Griege. Register now for this dinner meeting.


2014 Washington Association of Mortgage Professionals, WAMP, Government Affairs Committee meeting (4PM) immediately followed by Happy Hour in the Wooly Toad (5-7PM), today, October 24th. RSVP attendance too George@GeorgeCharles.com and RubyG@SalmonBayLending.com. Red Carpet event coming to Washington in November, Registration Information for WAMP’s Business & Humanitarian Awards Gala on Friday, November 7th. The 2014 Award Recipients will be announced.


Colorado Mortgage Lenders Association’s (CMLA) announced the early bird registration deadline, November 26th, for Mortgage Leadership Program MLP. MLP curriculum includes industry history, legislative, compliance and mortgage company analysis.


The Ohio Mortgage Bankers Association Legislative day is a free event on November 18th. Learn how a bill becomes a law, hear about legislation that affects the way you do business, learn how to effectively discuss legislation with your member of the Legislature, meet your member of the Legislature, and attend our Legislator Reception.


OMBA’s registration  for Surviving a CFPB RESPA Examination Webinar is underway; the webinar is scheduled for Wednesday, October 29th.


Wisconsin Mortgage Bankers Association event on November 12th includes both Integrated Mortgage Disclosures– Changing from Old to New presented by: Phil Schulman and CFPB Enforcement Actions and CFPB Examination Procedures presented by: Holly Spencer Bunting.


The National Reverse Mortgage Lender’s Association has announced the preliminary agenda for its 16th Annual Meeting & Expo, to be held November 10-12 in Miami Beach.


“Rob, do you ever hear of secondary marketing classes?” Yes. The MBA offers a two-part webinar series called, “Understanding the Mystery of Secondary Marketing” being offered through its MBA Education group. (I am sure that it is better than the class I took with a similar name, but in which I learned nothing about women or relationships with females.) There are other courses such as the MBA Schools of Mortgage Banking (Part 1, 2 and 3) that also cover secondary marketing.


AllRegs provides numerous resources to get you trained in underwriting VA loans quickly and easily.


AllRegs Ask A Regulator, Your State Compliance Answers Have Arrived. This free download includes answers to specific state compliance questions from across the country.


Register now for FHA’s SF Handbook-Origination through Post-Closing/Endorsement Section on Thursday, November 6, 2PM Eastern.


Plaza Wholesale is offering the following webinars:

WEBINAR: Ask the Underwriter: Reverse Mortgage

WEBINAR: Loan Prospector®: Interpreting the Feedback

MERS® has two remaining upcoming regional workshops to learn more MERS® System transactions and reports, including how and why to use reports. November 5th in St. Louis, register for the central region workshop and November 13th in Tampa, registration for the southern region workshop.


Turning to the markets, it seems that volumes have slowed back down as October wraps up and the 4-day refi boom ended. Thomson Reuters reports, “Supply was below average as well, with originations hitting the street at a subpar pace of between one and $1.5 billion today — a far cry from last week’s rates rally induced spike nearing two billion at times.” Rates crept higher with the 10-yr closing at 2.28% and agency MBS prices worse by about .250. And it might be a quiet autumn Friday with the only news being September New Home Sales, seen lower from last month’s 504k print. This morning the 10-yr is sitting around 2.24% and agency MBS prices better by about .125.



A Texan walked into a barbershop, sat on the barber’s chair and announced, “I’ll have a shave and a shoe shine.”

The barber (using a straight razor, by the way) began to lather his face, while a woman with the most beautiful “cleavage” that he had ever seen knelt down and began to shine his shoes.

The Texan said, “Young lady, you and I should go and spend some time in a hotel room.”

She replied, “I’m married and my husband wouldn’t like that.”

The Texan said, “Tell him you’re working overtime and I’ll pay you the difference.”

She said, “You tell him. He is the one shaving you.”




(Copyright 2014 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