Jan. 17, 2013: Mortgage jobs; Chase's mortgage numbers; Discover's discounted appraisal deposits; free webinars & training
Rob Chrisman


“How many houses for so little money? And what kind of article mentions ‘Long Island, mink farmers, and Blackstone’ in the first few lines?” He rubbed his eyes in the early morning light, and read on in the Bloomberg article. “Peter Grosso of Long Island, New York, paid about $90,000 for 29 Detroit homes at an auction for tax-delinquent properties last October. He’s sure they’ll sell at a profit within 10 years, while he rents them for income. Grosso is part of a Detroit land rush that’s drawn investors from around the U.S. and as far away as England, Cambodia, China and Australia seeking distressed homes for as little as $500. Local buyers -- and even a Dutch mink farmer -- scooped up hundreds of houses at Wayne County’s tax auctions, which last year put a record 21,350 tax-delinquent properties up for sale, 89 percent of them in Detroit, and sold 12,333…While private-equity firms such as Blackstone Group LP snap up foreclosed homes in California, Arizona and Florida, smaller investors have found bargain-basement bonanzas in Detroit. ‘A lot of people think of Detroit as the armpit of America, but there are lot of nice areas in Detroit where there’s money to be made,’ said Nate Heaps, 32, of American Fork, Utah. He bought 290 Detroit properties for $189,600 at the October tax auction, according to Wayne County records. Here you go: http://www.bloomberg.com/news/2013-01-16/bargain-homes-lure-buyers-worldwide-to-detroit-mortgages.html.


(By the way – here is your trivia for the day. Rome and Detroit are supposedly the only two cities in the history of mankind to have had populations of more than 1 million and then dropped to less than 1 million at some point.)


Kinecta Federal Credit Union continues to grow its business and is hiring Retail Mortgage Loan Consultants in the greater Los Angeles area and a Wholesale AE for the Pacific Northwest to cover Washington, Utah and Oregon.  Additionally, Kinecta continues to hire Senior Underwriters, Underwriting Assistants, Loan Processors and Funders in their Southern California and Chicago operations centers. “Kinecta FCU is one of the nation’s leading Credit Unions with more than $3.2 billion in assets and serving over 236,000 member-owners across the country.”  Go to www.kinecta.org and click on the “Careers” tab to view all openings, position descriptions and apply online or send a resume to Daniel Borgstadt at dborgstadt@kinecta.org.


On the other side of the nation, JPMorgan Chase reported its 4th quarter income numbers. (Amazing how these huge, complex firms can come up with results a couple weeks after the quarter, yet smaller firms can take much longer – guess it’s a manpower thing.) Chase had a net income of $5.7 billion on revenue of over $24 billion – its third consecutive year of record net income.  Mortgage Banking reported strong production revenue; originations of $51.2 billion, up 33%. Last year the company originated more than 920,000 mortgages. It had a $700 million pretax benefit ($0.11 per share after-tax increase in earnings) from reduced mortgage loan loss reserves in Real Estate Portfolios.


Jamie Dimon said, “The real estate portfolios, while at elevated levels of losses, continued to show improvement as the housing market and economy continued to recover. As a result, we reduced the related allowance for credit losses by $700 million in the fourth quarter and we are likely to continue to see reductions in the allowance as the environment improves…We are committed to doing our part to speed the recovery of the housing market. This includes working with struggling homeowners to modify their loans, or pursue other options to allow them to prevent foreclosure. Through these efforts, since 2009, we have offered more than 1.4 million mortgage modifications and completed 610,000 for both loans we own and those we service for others. With respect to Chase-owned mortgages, through modifications and short-sales, we have effectively forgiven more than $10 billion of principal and reduced borrowers' interest payments by approximately $2 billion.” Mortgage fees and related revenue surged to $2.03 billion in the quarter from $723 million a year earlier. Demand for loans rose amid government incentive programs and as the unemployment rate fell to 7.8 percent in the quarter from 8.9 percent in the year-earlier period.


Speaking of big companies, the WSJ reports that “Credit card company Discover wants its customers to take out one of its mortgages as well, and launched a new offer today that will give cardholders a discount on mortgage appraisal deposits paid for with their credit cards. It has been in the mortgage business for less than a year, but thinks it can get much bigger by linking up its card users with its home loans. Discover, looking to add juice to its nascent mortgage-lending business, is pitching its credit-card customers the ability to get 5% off a loan-appraisal deposit by using their Discover and getting a cash back “bonus.” DFS entered the home-loans business in June and has since originated more than $2 billion of loans. It’s previously said it’d like to be as big as Quicken Loans, an online mortgage originator that did about $30 billion in 2011. The cash back pitch could serve dual purposes: in addition to enticing customers to look into refinancing through DFS, it also encourages them to charge up their cards–and hopefully pay some interest, too.”


Hammerhouse LLC released its opinion of trends for this year in the mortgage lending sector. “2013 will see the mortgage industry continue to evolve and the job of originators continue to become more professional…The industry will continue to stabilize and the companies that are properly structured, with strong leaders, quality-focused, balanced production, technologically advanced, geographically oriented and financially strong, will find 2013 to be the year they excel versus their peers.” So stated Drew Waterhouse, Managing Director of Hammerhouse. Yes, the statement could apply to practically any year in lending, or across a wide variety of industries, so for more mortgage-industry thoughts visit: http://www.sfgate.com/business/prweb/article/Hammerhouse-Provides-2013-Outlook-on-Key-Mortgage-4198443.php.


Is Genworth’s mortgage insurance unit troubled? Well, according to Fox News it is: http://www.foxbusiness.com/industries/2013/01/16/genworth-to-separate-mortgage-insurance-business/.


This Friday (1/18) 10AM PST/1PM EST, the Community Mortgage Lenders of America (http://www.thecmla.com/), in conjunction with its outside legal counsel, the American Mortgage Law Group, will be hosting a FREE webinar regarding: (1) the impact of the multi-billion dollar settlement that was entered into between Bank of America (“BOA”) and Fannie Mae (“FNMA”); (2) the evolving landscape of agency and investor repurchase/make-whole demands for 2013 and beyond; and, (3) invaluable tips on how best to protect your companies against the next wave of repurchase/make-whole demands being made by agencies and investors alike. In addition, both CMLA and AMLG promise to have a very special surprise guest speaker who has agreed to participate in the forthcoming webinar.  While the CMLA routinely provides such complimentary webinars to its ever growing membership, along with many other benefits of value, CMLA has made the decision to open this webinar up to the public, free of charge, in light of the unusually high demand and interest in the foregoing topics.  Of course, given the fact that space is limited to 300 participants, members of CMLA and clients of AMLG will be given priority and the remaining registrants will be allowed on a first come, first serve basis.  For information on how to register for this webinar, please contact the CMLA’s Executive Director, Kevin Cuff, at kmcuff@thecmla.com; or, the AMLG’s Managing Member, James Brody, at jbrody@americanmlg.com.  


Regarding Bexil American’s lock policy, yesterday the commentary noted: "in order to be locked all loans must be in Conditional Approval and had their prior-to-documents conditions approved by an underwriter (excluding Document Requests, final signed 1008 forms, and final DUs).” That is true only for Bexil’s 15 day lock. All other lock options do not have that set of requirements.




The FHA will be offering a 203(k) Rehabilitation Mortgage Insurance webinar today (the 17th) that will provide of the program and discuss underwriting strategies.  The training is suitable for loan officers, processors, brokers, agents, or anyone else looking to learn more about FHA-HUD single-family insured loans.  See http://www.visualwebcaster.com/event.asp?id=91458 to register.


Also taking place today will be a 203(h) Home Mortgage Insurance for Disaster Victims that will provide participants with a description of the program, eligibility requirements, maximum insurable mortgages, closing costs, prepaid expenses, minimum borrower cash investment, mortgage terms, MIP payment, and refinancing policy.  As the training covers a wide range of topics, all industry professionals are welcome.  To register, visit http://www.visualwebcaster.com/event.asp?id=91458.


How about those mortgage applications? In spite of inventories being meager in many areas, purchase apps were up almost 13%. Refi applications were up over 15% and total apps were up about 15%. The MBA reports that year-over-year, purchase applications are up 5% while refi’s are up only 1% - but still hovering around 82% of total applications. The smartest minds in the room think that mortgage applications will remain elevated for the next several quarters, driven by the continued low rate environment and HARP volume. HARP accounted for roughly 18.5% of GSE refinance activity in October (the most recent month for which data was released).


“Rob, rates shot up a couples weeks back, and now have come back down. What’s going on out there?” Darned if I know, but I’ll give it a shot. As I mentioned last week, rates moving higher after the Fed’s released of its minutes was unwarranted. There was nothing in there we didn’t know. (That being said, unless the Fed decides to soak up all our agency mortgage-backed security production forever, eventually it will stop buying MBS, and home loan rates will move higher.) Rates have drifted back down for two reasons: a) The market deciding that this previous point was true, but perhaps more importantly b) political squabbling on the U.S. debt ceiling. Our Congress is at it again, and their bickering has pushed U.S. Treasuries up for the fourth day in a row. On top of that, risk-free 10-year yields are approaching their lowest levels in the past two weeks due to the World Bank cutting its’ global growth forecast.


In terms of rate movement, Wednesday was another snoozer. Hey, lots of folks don’t want a lot of volatility, so we’ll take it! By the 3PM EST marks, 10-year notes were basically unchanged at 1.82%, as were agency MBS prices. Some folks were hoping for a little excitement from the Fed’s Beige Book report (released in preparation for the Jan. 29-30 meeting). There was nothing earth-shattering. Economic activity was described as having expanded since the last report in November with growth characterized at modest or moderate.


Today is another busy day of data and events: Initial Jobless Claims, Housing Starts and Building Permits, and the Philly Fed. Initial Claims (1/12) is expected lower to 365k from 371k; Housing Starts (Dec) is projected 3.4 percent higher to 890k, while Building Permits is predicted to increase 3k to 900k.



When I was in high school, I got in trouble with my girlfriend's Dad. He said, "I want my daughter back by 8:15." I said, "The middle of August? Cool!"

My girlfriend's weird. One day she asked me, "If you could know how and when you were going to die, would you want to know?" I said, "No." She said, "Okay, forget it."

I went for a walk last night and she asked me how long I was going to be gone. I said, "The whole time."

My buddy got busted for counterfeiting. He was making pennies. They caught him because he was putting the heads and tails on the wrong sides.

He's in a minimum security prison now; he's on a whiffle-ball and chain.

Hermits have no peer pressure.

Whenever I think of the past, it brings back so many memories.

There's a fine line between fishing and just standing on the shore like an idiot.

How much deeper would the ocean be if sponges didn't live there?



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 role of the IRS and REMIC's in the current credit crisis. 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.


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http://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx or www.TheBasisPoint.com/category/daily-basis. For archived commentaries or to subscribe, go to www.robchrisman.com. Copyright 2013 Chrisman LLC. All rights reserved. Occasional paid notices do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)




Copyright - Rob Chrisman