And
narrowing things down even farther, in Washington a regional
bank is expanding its mortgage operation. Banner Bank,
a publicly-held Washington state financial institution founded
in 1890 (nice price movement: http://finance.yahoo.com/q?sºNR)
is growing: with offices throughout the Northwest Banner is
looking for loan originators, processors, underwriters,
and closers in all locations in Washington, Oregon, and
Idaho. I know the folks at Banner Bank pretty well – they’re a
good bunch – and here is more on the mortgage operation: http://bannerbank.mortgagewebcenter.com/.
Contact the team at homeloans@bannerbank.com.
Does
our industry really need the subject of eminent domain
weighing on it? We don’t, but here it is anyway. If investors
are skittish about purchasing securities backed by loans that
can be plucked out, prices are expected to drop, resulting in
higher rates – and once again new borrowers will pay the
price. Mortgage Resolution Partners is behind the movement,
and to the best of my knowledge funding for the project is
still a bit of a mystery. For more information one can visit
Mortgage Resolution Partners' website at http://mortgageresolution.com/fact-or-fiction,
or perhaps send an e-mail to its CEO Graham Williams where the
nomenclature could be GWilliams at mortgageresolutionpartners,
dot com.
But
last week, even though municipalities are focused on
non-agency securities, Freddie & Fannie’s FHFA issued a
notice to warn of the controversial use of eminent domain to
seize underwater mortgages. Kind of like your big brother
showing up when you felt threatened by someone (besides your
big brother). SIFMA, the trade organization representing the
securities industry, protesting the proposed actions and
indicating that such an action would trigger litigation
against the local governments and ultimately backfire on the
communities' borrowers, limiting credit in the future. In
response to those comments, California Lieutenant Governor
Gavin Newsom politely told SIMFA to shut up.
The FHFA, as conservator of Freddie Mac and Fannie Mae (the
GSEs), said its obligation is to preserve and conserve the
GSE's assets and to minimize costs to taxpayers. These
entities purchase a large portion of the mortgages originated
in the U.S. the notice says, and they hold private label
mortgage backed securities containing pools of non-GSE loans. Banks
also have large holdings of such securities and accept
collateral that consists of mortgages of member financial
firms pledged in exchange for advances of funds. The FHFA has
significant concerns about the use of eminent domains to
revise existing financial contracts and the alternation of the
value of GSE or bank securities holdings. In the case of the
GSEs resulting losses would ultimately be borne by taxpayers.
FHFA also expressed concern that the programs could undermine
and "have a chilling effect" on the extension of credit by
investors that support the housing market.
So it has determined that it might need to take action both as
conservator of the GSEs and regulator for banks to avoid a
risk to safe and sound operations and avoid taxpayer expense.
The proposed use of eminent domain raises issues about the
constitutionality of such an action, the application of
federal and state consumer protection laws, the effects on
holders of existing securities and on millions of negotiated
and performing mortgage contracts. There are also issues
regarding the role of the courts in administering or
overseeing such a program and, in particular, critical issues
surrounding the valuation by local governments (as is typical
in eminent domain proceedings) of complex contractual
arrangements that are traded in national and international
markets.
The
mortgages would be taken at fair market value, and then
restructured into new loans with terms reflecting the current
market. In the notice, which was sent to the Federal Register,
FHFA stated it had “significant concerns about the use of
eminent domain to revise existing financial contracts and the
alteration of the value of Enterprise or Bank securities
holdings.” What is the impact on millions of negotiated and
performing mortgage contracts? Through notice in the Federal
Register FHFA said it is accepting input on topic through its
Office of General Counsel no later than September 7, 2012: http://www.fhfa.gov/webfiles/24143/EminentdomainPR8812F.pdf.
On the Realtor/LO question, David Oldenburg writes, "My
perspective on Realtor/ Loan Officer and who has a harder
job... I have worked as a Realtor and a loan officer over the
last 20+ years. I have been a broker for 20 years and I own
both a real estate company and a mortgage company and I have
trained both and cross-trained both for 2 decades. I also
trained and wrote training courses for both loan officers and
Realtors on a national level. I have seen many loan officers,
make the jump to become a Realtor and they do it very easily
and most have success and make money. They also tell me they
can't believe how much easier it is to be a Realtor. I have
yet to see a single Realtor make the jump to becoming a loan
officer with any great success. The last 5 Realtors who have
tried have all given up within 12 months and they all tell
me they were shocked that working as an LO was so much more
difficult than working as a Realtor. I have also
personally worked as a Realtor and as an LO and there is no
comparison, the Realtor job is far easier to learn, far less
technical and the pay per deal is far higher.”
But
Mr. Oldenburg continues to opine. “Within 3 years the 3%
commission per side will be a thing of the past. There
are already billion dollar companies working on models, like
Zillow has for LO’s. Models that would make Realtors bid on
business in their areas. The one who agrees to give up the
highest level of their commission to get the deal is the one
who gets the deal. LO's have been bidding for business online
for years and it is finally going to happen for Realtors. I
suggest Realtors join forces with LO's and quit debating
about who works harder. We all work hard these days and
right now we are all slowly being down-sized, over-regulated
and will ultimately be replaced if we do not band together.”
And
Linda from Florida writes, “We both work very hard for our
money and especially through these last few years of constant
changes in the mortgage industry. The Flat Fee proposal
presentation - why would that be a good idea for real estate
or the homeowners? It only benefits the banks, at best. NAR
is working hard in DC for regulation. Here's the link to
the database of submissions this past year: http://www.ksefocus.com/billdatabase/index.php.
Make sure you select all since there are many pages to view.”
Citibank
issued a credit policy update on approved private mortgage
insurance companies – MGIC did not make the cut. “When
private mortgage insurance (MI) coverage is required, it must
be provided by a Citibank approved company. Effective with new
loan registrations on or after September 1, 2012, Citibank
will no longer accept Loans having mortgage insurance issued
by MGIC. Pipeline Loans having MGIC as the MI provider must be
purchased by Citibank no later than October 31. Effective
September 1, 2012, the approved MI companies are: Essent,
Genworth, Radian, UGIC, and CMG. Additionally, the same
September 1, 2012 Loan registration date and October 31, 2012
purchase deadline apply to Loans from Correspondents with
delegated underwriting authority that use MGIC for contract
underwriting.”
Fortunately for us, there is not much going on in the
fixed-income markets (which include most mortgage-backed
securities): no real news in the United States, quiet
overseas, no auctions, no nothin’. The U.S. 10-yr note closed
at 1.65%, almost unchanged, and rate sheet MBS prices were
also nearly unchanged.
This
morning we had the Producer Price Index for July, where the
index was seen higher +0.2% but actually came out +.3%. The
core rate (ex-food and energy) was also higher than expected
at +.4%. But the big surprise came with July’s Retail Sales
figures. Anticipated at +0.3%, ex-autos +.3%, it came in at
+.8%, ex-auto +.8%. Since consumers fuel the economy, these
strong numbers have pushed rates a little higher: in the
early going the 10-yr is up to 1.70% and MBS prices are
worse by about .250.
(Listen, there are too
many jokes flying around concerning politics to ignore them.
I will do my best to keep them even, but just know that the
parties and people can easily be switched and re-used every
four years.)
Last Saturday afternoon, in Washington, D.C., an aide to Nancy
Pelosi visited the Bishop of the Catholic cathedral in D.C. He
told the Cardinal that Nancy Pelosi would be attending the
next day's Mass, and he asked if the Cardinal would kindly
point out Pelosi to the congregation and say a few words that
would include calling Pelosi a saint.
The Cardinal replied, "No. I don't really like the woman, and
there are issues of conflict with the Catholic Church over
certain of Pelosi's views."
Pelosi's
aide then said, "Look, I'll write a check here and now for a
donation of $100,000 to your church if you'll just tell the
congregation you see Pelosi as a saint."
The Cardinal thought about it and said, "Well, the church can
use the money, so I'll work your request into tomorrow's
sermon."
As Pelosi's aide promised, Nancy Pelosi appeared for the
Sunday worship and seated herself prominently at the forward
left side of the center aisle.
As promised, at the start of his sermon, the Cardinal pointed
out that Ms. Pelosi was present. The Cardinal went on to
explain to the congregation, "While Ms. Pelosi's presence is
probably an honor to some, the woman is not numbered among my
personal favorite personages. Some of her most egregious views
are contrary to tenets of the Church, and she tends to flip-
flop on many other issues. Nancy Pelosi is a petty, self
-absorbed hypocrite, a thumb sucker, and a nit-wit. Nancy
Pelosi is also a serial liar, a cheat, and a thief. I must
say, Nancy Pelosi is the worst example of a Catholic I have
ever personally witnessed. She married for money and is using
her wealth to lie to the American people. She also has a
reputation for shirking her Representative obligations both in
Washington and in California. The woman is simply not to be
trusted."
The Cardinal concluded, "But, when compared with President
Obama, Ms. Pelosi is a saint."
If
you're interested, visit my twice-a-month blog at the STRATMOR
Group web site located at www.stratmorgroup.com.
The current blog discusses the FinCen, SAR’s, and the impact
on mortgage lenders. If you have both the time and
inclination, make a comment on what I have written, or on
other comments so that folks can learn what's going on out
there from the other readers.
