Feb. 25, 2013: Mortgage jobs; FHA Connection site up; more on LO comp numbers; yes, Saudi Arabia is fixing its mortgage industry too
Rob Chrisman


A recent Visa survey finds the Tooth Fairy put an average of $3 under children’s pillows in 2012, a 15% increase over 2011. Meanwhile, a survey by the American Institute of CPAs finds the average allowance paid to kids of all ages is about $15 per week; 61% of parents pay an allowance and about 50% begin to do so when their child hits age 8. Good grades were also rewarded, with parents saying they paid an average of $16.60 for each good grade, in addition to the regular allowance. Between the Tooth Fairy and allowance, lots of kids have it pretty good. And it is tax free!


Given the storms hitting the Midwest and Northeast, jobs elsewhere sound pretty good. Homeowners Financial Group (www.homeownersfg.com) based in Scottsdale, AZ, is rapidly expanding its presence in the West and is opening two offices in Southern California this month.  Homeowners anticipates continued growth in California during 2013, and is looking for talented branches and loan officers that are true mortgage professionals, have strong ethics, and fit the company's unique culture. In addition to standard conventional, FHA, and jumbo offerings, Homeowners has unique portfolio programs available for borrowers with an unseasoned short sale, foreclosure, or bankruptcy (Clean Slate), and another program for borrowers looking to move up (convert current property into rental), but lacking the 30% equity required in their current residence (Step Up Now).  Homeowners was recognized as the #1 Best Place to Work in Arizona in 2012, and has been a top 5 company in that category for the past 8 years. Please direct any inquiries to Mike Cook, Southern California Area Sales Manager, at mcook@homeownersfg.com.


And Hilco Real Estate has an immediate opening in its Northbrook, IL office for a Senior Vice President, Sales and Business Development to lead the pursuit of new business in the company’s Real Estate Finance group.  Hilco Real Estate Finance (HREF) provides private money, short term financing for investors who buy, renovate, and sell residential real estate. The SVP of Sales and Business Development “will play a pivotal role in revenue generation for the company, supervising and directing a team of HREF Sales Representatives and establishing and maintaining a productive and efficient business development strategy. The person will work closely with the CEO of HREF and Hilco Real Estate senior management on all aspects of this new venture in creating and executing a detailed and comprehensive business development, marketing and sales strategy and oversee these areas of the company’s operations. You can write to me confidentially for the full job description, and/or resumes and questions can be sent to jobs@hilcorealestate.com or Mark Filler at mfiller@hilcorealestate.com.


Speaking of job opportunities, David Schneider, who headed Washington Mutual’s home-loans unit during the peak of the mortgage bubble, was running another sizable mortgage company (Vericrest) until this past Friday. The Seattle newspaper noted, “Though Schneider is now out, several other WaMu veterans, including former chief operating officer Stephen Rotella, are still involved with the company, Vericrest Financial of Irving, Texas. Vericrest, wholly owned by private equity firm Lone Star, specializes in servicing subprime mortgages and delinquent or otherwise troubled loans, of the sort that WaMu became notorious for peddling. It services some 55,600 mortgages with total outstanding principal balances of $10.1 billion…Last fall, Schneider appointed Rotella and John McMurray, WaMu’s former chief risk officer, to a newly formed advisory board. Radha Thompson, another former WaMu executive, is Vericrest’s chief information officer…Besides servicing mortgages, Vericrest also has waded back into the mortgage-backed securities market. Since 2009 the company has floated more than $2 billion in bonds backed by nonperforming loans (NPL), most recently a $99 million issue last month.” For those playing along at home, last month Vericrest announced a merger with Caliber Funding, a mortgage lender also owned by Lone Star. Caliber says it originates an average of $656 million in home loans each month; once the deal closes later this year, the combined company will operate in all phases of the mortgage business.


Could a new WaMu be quietly growing on the north Texas plains? There is always Saudi Arabia! Yes, it has its own mortgage business, with its own mortgage problems. Here you go: http://www.bloomberg.com/news/2013-02-24/saudi-arabia-completes-regulations-for-3-of-5-new-mortgage-laws.html.


Saturday this commentary gave an update on the USDA Rural Housing program, and I received a couple notes. “One thing that jumped out at me about this section is that USDA loans are NOT insured they are GUARANTEED loans and there is now an Annual Guarantee fee that is paid with the payment on a monthly basis and was added to the loan payment above and beyond the Loan Guarantee Fee (not insurance as many ignorant originators think it is). All I can say is any originator that thinks USDA or VA loans are ‘insured’ needs to get out of my industry and go sell cell phones.” And Marc Savitt, CRMS and President of the National Association of Independent Housing Professionals, wrote, “Concerning the USDA Guaranteed program, the government no longer funds this program. In 2011, USDA changed their fee structure (including a monthly fee in addition to the upfront fee), which enabled the program to be self-funded. I was also told that when a new CR is passed it may include a 10 year extension on the current eligible areas. This would be a smart move concerning it helps the low to moderate income borrowers and doesn't cost the government a dime.”


And it seems every day I am asked about the FHA Connection site. As Doug S., an expert on these things with Peoples Bank, wrote me last week, “The only website I know of is the VA.Gov site and they offer no information on delinquencies (the VA does not have a ‘connection’ type website. I have not heard anything regarding VA delinquency rates on IRRRLs.  I did call our regional office and they had no information, nor did they know of any.  They recommended I e-mail them the question and they will forward it to Washington for a response.” But then Doug followed up with, “It looks like FHA connection is now operational.  I did not get the message that it is down and the system has been updated with December numbers.” Thanks Doug, and here is the site: https://entp.hud.gov/clas/index.cfm.


Friday I mentioned the cost of producing a loan, along with loan officer compensation. I received this note from Jeff Babcock, senior partner at the STRATMOR Group: “For Loan Officers employed at midsize independent mortgage bank, the 2011 MBA/STRATMOR peer group reported that the average yearly commissions earned was $84,311.  Although we have not yet compiled 2012 data, we anticipate that average commissions could well exceed $100,000.  We are pretty confident that the peer group averages are a good proxy for the mortgage origination industry.  Is America great or what?” (If you have questions about this for Jeff, he can be reached at Jeff.Babcock@Stratmorgroup.com.


And a top branch manager from the Northeast wrote, “If the average revenue for mortgage brokers is 2.25% per loan then they only need to close $5 million in production to earn over $100K.  It is sad for our industry that mediocre producers can make 6 figure incomes because if most of these same players looked for salaried employment in any arena they would never be able to make that income level. What I hear from originators is that they are making more money in today's LO comp environment because they cannot cut their prices to get a loan in the door, the focus on service, quality and communication has made them better sales people because they have to sell on other attributes versus price. Many have told me that they used to say to themselves, ‘What do I have to cut to get this loan?’ Today the rate conversation is secondary to the full mortgage interview.”


Let’s turn to some recent agency, investor, and vendor updates to give us a flavor for current trends.


We haven’t had an article on Fannie and Freddie’s future lately, but here’s one. Those “in the know” say that we shouldn’t look for any changes, or any plan for changes, until next year. Here is the latest for those with a WSJ subscription: http://online.wsj.com/article/SB10001424127887323699704578324141792357594.html?mod=WSJEUROPE_hps_LEFTTopWhatNews.


As another reminder, all FHA purchases up to $625,500 with case numbers assigned on or after April 1st will be affected by MIP changes.  A 1.30% premium will apply to loans with amortization over 15 years with LTVs of 95% or less (1.35% for such loans with LTVs over 95%), while loans with terms under 15 years and LTVs between 78 and 90% will be subject to an annual premium of 0.45% (0.70% for such loans with LTVs over 90%).  Loans with terms of less than 15 years and LTVs under 78% will not incur an annual premium.  Corresponding loans with amounts over $625,500 will incur annual premiums of 1.50%, 1.55%, 0.70%, and 0.95%, respectively.  FHA-to-FHA and non-FHA-to-FHA refinances, use the same pricing, while the UFMIP and annual MIP for Streamline refinances can be determined using the product guides.


Fannie Mae has revised its post-purchase file review process to reflect the new representation and warranty framework and will be providing updated the available resources and training sessions.  To access the support materials, see https://www.fanniemae.com/singlefamily/loan-quality.


M&T Bank has updated pricing for all non-M&T-to-M&T Streamline refinances registered on or after February 20th.  Pricing now differs based on whether or not a loan’s current LTV as determined by the Freddie Mac HVE exceeds 115, while current loans with LTVs below 115 will receive better pricing than those with LTVs above 115.  For updated LTVs at or below 115, M&T will apply a price adjustment of 0.375 for credit scores between 660 and 679; however, M&T-to-M&T Streamline refinances are not subject to any changes in pricing.


PennyMac will begin requiring that FHA Property Flip loans contain a representative FICO of at least 680 for all commitments issued on or after March 11th.  As a reminder, Property Flips are considered to be properties resold within 90 days of purchase as determined by the date of settlement on the seller’s purchase of that property.


Interest rates? Zzzzz…. U.S. economic data for January continues to be fairly benign, masking some issues that will show up more in February. Anecdotal reports are warning of decreased retail sales as tax hikes reduce after-tax income. This is not only happening because of higher federal taxes, but is also happening at the state level in California, which accounts for 13 percent of U.S. economic activity.  Counterbalancing the drag from higher taxes is the positive wealth effect from increasing home and equity prices. Robust job creation would certainly be an effective antidote to higher taxes, but there is no evidence yet of an increase in hiring in February over a mediocre January.


This week the focus seems to be include an Italian election, and the Ben Bernanke testimony tomorrow and Wednesday at the Humphrey-Hawkins meeting. On the data front we’ll see consumer confidence, 2-month old Case-Shiller data, home sales and pending home sales, durable goods, GDP, ISM, jobless claims, and confidence data. We also have 2yr, 5yr and 7yr supply. Early on we are unchanged at 1.97% on the 10-yr yield and roughly unchanged on agency MBS prices.


(PG rated?)

Only in Canada would you see a sign like this:


WARNING Due to the frequency of human-bear encounters, the B.C. Fish and Wildlife Branch is advising hikers, hunters, fishermen, and any persons that use the out of doors in a recreational or work related function to take extra precautions while in the field.

We advise the outdoorsman to wear little noisy bells on clothing so as to give advance warning to any bears that might be close by so you don’t take them by surprise.

We also advise anyone using the out-of-doors to carry “Pepper Spray” with him in case of an encounter with a bear.

Outdoorsmen should also be on the watch for fresh bear activity, and be able to tell the difference between black bear feces and grizzly bear feces. Black bear feces is smaller and contains lots of berries and squirrel fur. Grizzly bear s_-_ has bells in it and smells like pepper.



If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog is how "Basel III Could be a Game Changer for Lenders and Servicers." 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 job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)




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