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Apr. 12, 2011: Mortgage jobs in the Western US; M&A activity in the Central region; FHA MI changes in less than a week
Rob Chrisman
I have
been retained by an expanding residential retail
lender that is searching for a Director of Operations. The
lender is looking for someone who either lives in California or
is willing to relocate. The right person should be strategic,
yet hands-on, when it comes to managing the Mortgage Banking
Operation, and must have experience in managing processing,
underwriting, QC, doc drawing, funding, shipping, and
post-closing functions. He or she will have credit authority,
and needs to be able to establish service oriented culture even
through this new environment. In addition, the ideal candidate
will be able to exhibit leadership skills in order to manage and
develop other supervisors. Please feel free to pass this on if
you know someone who’d be interested as it is a very good
opportunity to join a solid company with a seasoned management
team. Please send questions or resumes to me at rchrisman@robchrisman.com.
On the flip side, I
receive my fair share of "out of office" replies. But this
unfortunate one caught my eye yesterday: "Thanks for your
interest in City Mortgage Services.
Unfortunately due to a new law that took effect Wed April 6,
2011, City Mortgage Services is no longer able to stay in
business. This email is being forwarded to Norman H. at
-------@gmail.com. Please direct any questions or concerns to
that email address."
But some companies
continue to expand. In the wholesale sector Real
Estate Mortgage Network is hiring regional managers and AE's
in Arizona, California, Colorado, New Mexico, Nevada, and
Oregon. REMN has been in mortgage banking since the 1980's and
is servicing about $1.4 billion as a Ginnie Mae seller/servicer,
but just opened up the West Coast wholesale operation. For more
information go to http://www.remnwholesale.com,
and/or contact Tom Conklin at tconklin@remn.com.
Chicago Bancorp will be buying a
Kansas bank in order to “break into banking as regulatory
controls over non-bank mortgage lenders have increased in the
wake of the housing-led recession.” The company, which
originated over $1 billion in 2010, secured approval from the
U.S. Office of Thrift Supervision to purchase Overland Park,
Kan.-based Generations Bank. “The Calk brothers
hope to shift the mortgage business they do at Chicago Bancorp
to Generations Bank. The reason: Their regulatory costs have
soared as states have instituted separate licensing programs for
sales reps. A federal banking charter allows banks to operate
under a single regulator.” http://www.kansascity.com/2011/04/07/2784920/generations-bank-sold.html
Down in Oklahoma (unofficial motto: Like the play, but without
the singing), for its 5th acquisition in less than a
year, BancFirst will purchase 1st Bank Oklahoma for an
undisclosed sum. http://newsok.com/bancfirst-continues-its-growth-in-oklahoma/article/3556471
Monday is the day
that FHA originators have been worrying about, which is the
day that the MI premiums increase. But private MI
companies hope the change will mean they can move away from
generic paper towels in lunch rooms and buy name-brand products,
as it seems that private MI will become relatively much less
expensive and thus more popular. Every scenario is different, of
course, but I have heard figures as high as private MI becoming
over 50% less expensive than FHA MI. The borrower's MI versus
MIP cost will be significantly lower, but private MI companies
still have some challenges with the total GNMA vs. GSE MBS
execution. On the government side, look for an increase in its
Annual Mortgagee Insurance Premium of 25 basis points, or 0.25 –
for loans with case numbers ordered on or after Monday the new
annual premium will be 110 bps for loans equal or less than 95%,
while loans over 95% will have a 115 bps premium. Up-front
premiums will continue at 1%.
FHA specialists point
out that even with the increase in the annual premium, FHA will
continue to be a viable option for homebuyers, with the more
lenient credit qualifying, and lower FICO scores when compared
to conventional financing at 95% for many cases. But it seems
that private MI savings going forward, in most cases, will be
greater because the private MI can be cancelled under HOPA
before 5 years, sometimes as soon as two years. And taking a
broader look, what typically does a mortgage insurance policy
cover? Usually MI covers mortgage payments for periods of
between 12 months and 5 years, though terms between three and
five years are increasingly difficult to find. Insurance usually
kicks in when the borrower is unable to meet their mortgage
payment obligations because of sickness, injury or unemployment
– MI does not cover fraud.
I continue to receive
input from the origination "trenches." “'Safe Harbor' against
the steering provisions in the new LO Compensation regulation is
a farce. To qualify for the Safe Harbor, one
of the provisions (as I understand it) is that the loan
originator must have presented to the consumer at least one
option for a loan without 'risky features.' Included in the
'risky features' are Neg Am, prepayment penalties, a balloon
payment in the first 7 years, a demand feature, and shared
equity or shared appreciation. In my almost 20 years in this
industry, I have yet to see a loan that didn’t include either a
Due on Sale Clause or an Acceleration Clause in the Note, both
of which are commonly referred to as 'demand features.' The
regulators may not have intended for it to be that broad, and
more than likely meant a true 'demand clause,' but that’s not
what it says. Based on the way it’s written, I don’t know
that’s its actually possible to meet that particular part of the
safe harbor. And if there’s no safe harbor, anything is
possible. I’m sure there is more than one attorney waiting to
test this against a lender who feels that they have met the Safe
Harbor requirements by getting a bogus disclosure signed or
offering products that don’t include any of the other “risky
features”. Absent of an official definition of the term used in
the regulation, I think it’s wide open for interpretation, and
more importantly, leaving an opportunity for some lender to get
burned."
"Rob, do you think that the new regulations needed to be put
into place when for the most part we had plenty of regulations
in place to enforce if the actual enforcement arms of our
government actually did their job? Instead of the FRB putting a
halt to competitiveness by claiming the right to dictate how we
can get paid in the mortgage industry how about some simple
statements saying ‘no more subprime mortgages, no more pay
option arms and guess what, Fannie and Freddie, the underwriting
standards that were create should be followed?’ How about some
massive fines for the rating agencies for incorrectly or perhaps
on purpose advocating the pools of risk upon layered risk that
they so freely endorsed. As an industry supporter and an
advocate for industry checks and balances, mortgage brokers and
their associations have asked for a balanced playing field for
many years. I have personally gone to DC to inform our
representatives about how we would gladly police our own
industry, what we can all do to help prevent abuses. No one
member of Congress or the Senate would do anything about it
until the meltdown came. What a shame our government now
believes they need to dictate how we should be compensated. I
believe our government has now gone too far. I believe a
consumer very rarely ever reads any documentation that is
provided to them regarding their rights under consumer
protection or anything for that matter. They counted on the
person they trusted to get the job done. I don't believe that
the LO Comp is protecting the consumer nor is MDIA or many of
the other things that have passed recently.”
With no market-moving news yesterday, mortgage prices pretty
much just sat although I noticed a few intra-day improvements.
MBS volume was very light, indicating that locks are down
everywhere, and in fact Tradeweb volume averaged just 61% of the
30-day average. With selling volume down, and continued buying
interest from REIT’s and money managers, mortgage did ok on a
relative basis. The 10-year note was about unchanged at 3.57%.
Today, however, not
only did we have some trade and import & export price news,
but the Treasury starts another auction cycle ($32 billion 3-yr
today, $21 billion 10-yr, and $13 billion 30-yr). The February
trade balance came in at $45.8 billion, sliding somewhat. Imports were +2.7%
month-over-month, a little higher than expected (+9.7% for the
year), and Export Prices were up 1.5%. And don’t forget those
problems in Portugal! But currently the 10-yr has
improved to 3.54% and agency mortgage security prices are
better by a shade.
(Warning: parental
discretion advised.)
Stuttering Cat - as explained by a 4th grade pupil:
A teacher was explaining biology to her 4th grade students.
"Human beings are the only animals that stutter," she says.
A little girl raises her hand. "I had a kitty-cat who
stuttered."
The teacher, knowing how precious some of these stories could
become, asked the girl to describe the incident.
"Well", she began, "I was in the back yard with my kitty and the
Rottweiler that lives next door got a running start and before
we knew it, he jumped over the fence into our yard!"
"That must have been scary," said the teacher.
"It sure was," said the little girl. "My kitty raised her back,
went, 'Ffffff!, Ffffff!, FfffffF,' but before she could say the
'F-word!,' the Rottweiler ate her!
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