Feb. 11, 2013: Mortgage jobs; KBW weighs in on PennyMac; notable developments at Nationstar, PMI, and Clearpoint Funding
Rob Chrisman

Terry Ward wrote, “I saw your comment about closing the USPS on Saturdays. I hope the CFPB and Congress can move fast enough (before August) to change the ‘business days’ definition for disclosures and recession.” Yes, things change; I sure send a lot of e-mails, not so many letters. I am sure that when someone came up with the idea of putting wheels on suitcases, the skycaps cried foul! And when investors such as Wells Fargo announce a cost to clients for processing paper files (instead of electronic files), perhaps the paper industry groans. The lending & banking industry continues to evolve… A 1.6% increase in JPMorgan Chase's share value brought the bank's total value to $184.9 billion, nudging out Wells Fargo last week which has a value of $184.2 billion. Some analysts said banks that invest heavily, such as JPMorgan, have more room to grow as they recover from the crisis, since they were harder hit than national banks, such as Wells Fargo.


iServe Residential Lending is continuing to expand its footprint in key markets throughout the country. Interestingly, Allen Friedman, who was still being “carded” when he entered this business, celebrates his 30th year in the industry this year. (Allen was a part of the original Great Western Bank wholesale team, and he has been with iServe Residential Lending since 2009 as their Western Regional Sales Manager and going strong - he’s one of the good guys in this business, so congratulations Allen!) iServe is looking for NMLS licensed Originators and Branch Managers. For more details on the company, visit www.iservelending.com and for more inquiries or to submit a resume, contact Allen at AFriedman@iservelending.com


Colorado State Bank & Trust Mortgage Group is hiring several Mortgage Loan Originators and Sales Managers for various offices throughout Colorado. CSBT is a subsidiary of BOK Financial Corporation (NASDAQ symbol: BOKF), a $27 billion financial holding company. Colorado State Bank and Trust has a history of providing banking and financial services to Coloradoans dating back to 1908. “CSBT’s Loan Originators can expect an aggressive commission structure, competitive pricing, niche products including 100% LTV’s with no MI, 80/10/10s & 97% LPMI - all of this, along with a local processing, underwriting and closing team to support you and all of your sales efforts.”  For more information or resumes to be sent, please contact Patrick Oros at POros@csbt.com.


Keefe, Bruyette & Woods issued a research piece on PennyMac, explaining how its 4th quarter beat estimates (“higher valuation changes in the distressed loan portfolio and lower taxes”). “Mortgage banking income was strong and in line with expectations.” “Total assets increased to $2.6 billion from $2.3 billion as PMT acquired $290 million (UPB) of distressed whole loans during the quarter. Total correspondent funding increased to $10.0 billion from $6.3 billion in 3Q. Lock commitments of $10.4 billion suggest volume should remain strong in 1Q13. The gain-on-sale margin (as a percentage of fundings) was 66 bps vs. 79 bps in 3Q and in line with our estimate.” But KBW suggests things will change going forward: “Separately, PennyMac Financial Services, the parent company of PMT's manager filed an S-1 registration. The management agreement was revised as well which will result in an increase in the incentive paid to the manager potentially offset by lower mortgage banking related expenses paid to the manager as the mortgage bank grows. We are trimming our forward estimates to reflect the new management agreement offset by higher income reflecting the strong earnings from the distressed portfolio in 4Q12.”


And here’s some activity in the U.S. mortgage insurance business. “Reinsurer Arch Capital Group Ltd said it would acquire CMG Mortgage Insurance Co and the operating platform of PMI Mortgage Insurance Co for about $300 million to enter a resurgent U.S. mortgage insurance market.” Here is the story: http://www.reuters.com/article/2013/02/08/us-cmgmortgageinsurance-archcapital-idUSBRE9170ES20130208.


And last week in The Lone Star State, Nationstar Mortgage announced the acquisition of Equifax Settlement Services. It bought the company from Equifax. “ESS is a leading provider of appraisal, title insurance and settlement services in the United States and serves a broad array of blue chip clients, including the largest financial institutions in the country. Nationstar intends to combine ESS with its Solutionstar platform and rebrand ESS as ‘Solutionstar Settlement Services’.” Nationstar’s CEO Jay Bray was quoted as saying, “In support of our strategy to further broaden our real estate services offering across the entire mortgage lifecycle, we will continue to pursue strategic acquisitions of fee-based services companies that meet our return thresholds.” As of last week, ESS, with $65 million in revenue last year, had over 130 employees based in Coraopolis, PA and Frisco, TX.


And last week, embedded in a rate sheet, Clearpoint Funding sent its clients a note saying, Effective today, 2/4/2013, the following products are suspended until further notice: Conventional ARMs, True Jumbos, FHA, VA, and USDA Guaranteed Rural Housing. For loans currently Submitted, Approved or any other in-house CPF status that are impacted by the changes that are currently floating, the loan must be locked no later than Today, February 4th EOB day. For loans Locked but not yet submitted to CPF, the loan must be submitted to CPF no later than Friday, February 8th EOB day. Extensions and Relocks will not be available for the below discontinued products. Note, any loans that are not locked and are not submitted at the time of this notification, the updated guideline discontinuations and changes will apply.”


On the same day, Clearpoint introduced a 97% LTV primary residence loan. (“Purchase & Limited Cash Out Refinance,      1 Unit: 97% LTV/(H)CLTV - Min. credit score of 660, 2 Units: 85%LTV/(H)CLTV - Min. credit score of 660, 3 - 4 Units: 75% LTV/(H)CLTV - Min. credit score of 620. Cash Out Refinance - 1 Unit: 85% LTV/(H)CLTV - Min. credit score of 700, 2 - 4 Units: 75% LTV/(H)CLTV.”)


NAFCU Services Corporation opened registration for the Genworth Mortgage Insurance Learning Series, six webinars offered at no cost to the credit union community. Genworth Mortgage Insurance is the NAFCU Services Preferred Partner for private mortgage insurance that enables credit union members to buy home years sooner by putting less than 20 percent down. “The Genworth Mortgage Insurance Learning Series (GMILS) covers key subjects selected to help credit unions increase their efficiency and productivity while better serving their members,” said David Frankil, president of NAFCU Services Corporation. “The live webinars will offer credit union professionals a chance to ask specific questions on each topic. The series is designed to augment a credit union’s in-house training for mortgage professionals, whether experienced or new to the industry.” The remaining dates and topics for the GMILS are: March 7 Understanding Credit Reports and Credit Scoring, April 4 Self-Employed Borrower: Case Study Part I: Completing the Form 91 with Personal Tax Returns, May 9 Self-Employed Borrower: Case Study Part II: Completing the Form 91 with Business Tax Returns, June 13 Desktop Underwriter® Training, August 8 Understanding Loan Prospector® Feedback Certificate  For more information and to register for the live webinars, visit www.nafcu.org/GMILS. The webinars will also be recorded and archived for online viewing at any time.


Jeffrey Parks RPM alerted me to the actual date of the FHA’s webinar on basic credit and liabilities underwriting. It is on February 20th “to any interested loan officers, underwriters, and processors. Credit history, liability analysis, short sales, and non-traditional credit guidelines will all be covered.” To register, visit http://www.visualwebcaster.com/FHA/91968/reg.html


For all loans with initial GFEs dated February 11th and after, Kinecta will be revising its Maximum Price Paid and Maximum Loan Originator Compensation for Borrower Paid transactions.  The new maximum net rebate will be the lesser of 5% or $20,000, while the maximum Borrower Paid LO Compensation on wholesale loans may not exceed the Lender Paid Compensation, including compensation received for investment property mortgages.


Flagstar announced, “We have lowered our credit score requirements for the Fannie Mae DU Refi Plus II - Other Servicer program. The minimum credit score for a primary residence will be 640. The minimum credit score for a second home/investment property will be 660. An appraisal is permitted in the event that a Property Fieldwork Waiver is not provided by DU, regardless of LTV.


MSI has changed the LTV/CLTV/TLTV limit to 80% on conforming FRM 2-unit properties, replacing the previous maximum of 85%. For multiple mortgages to the same borrower, MSI has updated its requirements to allow each borrower individually and all borrowers collectively to own up to five 1-4 unit residential properties, with or without financing.  Each borrower individually and all borrowers collectively may not have ownership in or be obligated financially one more than three 1-4 unit investment properties and, for purchases, cannot be affiliated with the builder, developer, or seller of the subject property.


MSI has issued a clarification that, for all principal residence conversions that require reserves, the reserves must be properly sourced and be the greater of those published in the MSI guide or those stipulated by the AUS.  It has also been clarified that MSI does not permit grants or funds from Down Payment Assistance programs on any conventional loan, either conforming or jumbo.


With regards to trade lines on conventional, MSI requires a minimum of three valid lines that must be reported trades for which the borrower has made payments for at least 12 months and include the opening date, current balance, and payment history.  The line can’t be a collection or charge-off or an authorized user account, and student loans in deferment with no payment history will not be considered as valid.


Speaking of jobs and recruiting at the start of the commentary, I received this note from Sonya Brewer with The Mortgage Recruiter. “We are the only recruiting firms with NMLS licensed recruiters.” That is an interesting twist: “we have a staff of all recruiters who previously worked in the mortgage industry.” (If you’d like to reach Sonya, it is sonya@themtgrecruiter.com.)


Here on Amelia Island, in Florida, there is no chance of snow and Friday, in spite of MBS traders in Manhattan heading out early ahead of the snowstorm, was an active day. We had some news (the U.S. Trade Deficit unexpectedly shrank almost 21% to $38 billion, its lowest level since early 2010, due to a jump in fuel sales to overseas buyers combined with purchases of the fewest barrels of imported crude in almost 16 years). And so we saw an unusual event: the trade numbers actually moved rates slightly lower.


One interesting thing to note: just like a home owner refinancing out of their ARM and into a 30 or 15 year loan, last week we learned from the U.S. Treasury that the average maturity of its outstanding debt had risen to almost 65 months at the end of 2012, up 34% since an October 2008 trough. That is the longest average maturity in 10 years. The trend may continue, as under current policies, the average maturity of debt is set to rise to 80 months by 2022.


This week we’ll see an increase of scheduled economic news, which isn’t saying much given last week’s lack of it. Wednesday we’ll have Retail Sales, and Import and Export Prices. Thursday is Jobless Claims. Friday is an Empire Manufacturing number, the Industrial Production & Capacity Utilization duo, and a consumer sentiment survey number from the University of Michigan. Investors like to watch Retail Sales since roughly two-thirds of the economy is driven by you and me spending money. And of course the Jobless Claims number is an easy way to gauge the strength of the job market. We’ll also have the Treasury's quarterly refunding auctions of $72 billion ($32 billion in 3-year notes tomorrow, $24 billion in 10-year notes on Feb. 13, and $16 billion in 30-year bonds on Valentine’s Day).


In the early going, the U.S. 10-yr, which closed Friday at 1.95%, is sitting around 1.98%, and we can expect agency MBS prices to worsen about .125. And no, it has nothing to do with Pope Benedict announcing he will resign on the 28th (the first one in about 600 years).



Dear optimist, pessimist, and realist -

While you guys were busy arguing about the glass of water, I drank it!


The opportunist


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