Think you have trouble finding good talent in the mortgage biz? The L.A. Times writes that President Trump signed an order to hire 15,000 new border agents two years ago and Customs and Border Protection paid $60.7 million to the consulting firm Accenture Federal Services to “recruit, vet, and hire” 7,500 such officers over five years. Accenture Federal has hired 33 such officers to date. While we’re talking about the working world, news has filtered down to me that California’s Terra Mortgage Banking/Opes Advisors (a division of Flagstar Bank) is the home to Nancy Goff, MLO, and mom of L.A. Ram’s starting Super Bowl Quarterback Jared Goff. Our business touches everyone!

Lender Products and Services

Now that market volatility has resurfaced for mortgage originators, how is your bottom line?  Beyond the slick marketing, are you satisfied with the performance of your current hedge advisor?  MIAC’s time-tested analytics and experienced traders have been delivering effective risk management services to its clients for nearly 30 years.  To learn more contact DiscoverMIAC@miacanalytics.com.

Although most lenders are focused on the struggles of margin compression and increased competition, fraud should be on the hot list of focus areas for 2019. In 2018, mortgage fraud risk rose to its highest post-recession level, climbing over 12% YoY in Q2. However, the fraud taking place in the industry today is quite different than what we saw back in the early 2000s. A new eBook, “Mortgage Fraud, Past & Present” shines light on fraud’s comeback and details what lenders should be doing to protect their business. An exclusive to Rob Chrisman subscribers today and a must-read for all mortgage leaders, download your complimentary copy here.

“As our Strategic Partners, many Real Estate Brokers are beginning to crush the competition by offering more to their agents without having to give up too much of what matters most – revenue and profitability. Our compliant, hyper-unique Joint Venture program provides much needed revenue and profit life-support, enabling our Strategic Partners to remain competitive in today’s real estate environment and to attract the best talent. With backing from nationally recognized and credentialed partners, we invite you to contact Brian Clark for more information regarding our nationwide Joint Venture footprint.”

Looking for ways to grow your business? Freddie Mac is collaborating with clients to deliver automation and insights that provide a competitive edge. Cut back on documentation and reduce time to close with Loan Product Advisor® automated income and asset assessment capabilities. Save borrowers time and money with ACE appraisal waivers, now available for certain condo unit loans. Grow your condo business with Freddie Mac’s unit-level condo exception tool, Condo Project AdvisorSM. Get greater efficiency with simpler collateral QC and underwriting in Loan Collateral Advisor® Get The Freddie EdgeSM.

What's the mortgage version of "having your cake and eating it too"? Well, thanks to United Wholesale Mortgage, it means having access to superb service, technology, partnership tools...AND price! UWM has dropped its rates across the board - for conventional, government and jumbo - giving the nation's No. 1 wholesale lender unequaled pricing in the country, to go along with everything else that makes it the most popular wholesale lender among mortgage brokers. UWM has removed all state adjustments and all Loan Level Pricing Adjustments (LLPA) overlays, as well. Now, not only will mortgage brokers enjoy the fastest and easiest experience by working with UWM, they'll also get their customers unmatched best rates. To learn more, visit www.UWM.com/have-it-all.

Flood News

Could there actually be good flood insurance news? Perhaps. Did you know that flood insurance policies not backed by the government currently represent less than 5% of the residential market?

Capital Markets

Despite the cease fire in the temporary partial shutdown, it was a quiet day in the bond market. The U.S. 10-year closed Monday yielding 2.74%, nearly unchanged. In equity news, heavy machinery manufacturer Caterpillar below-consensus earnings guidance for fiscal 2019, expecting just a modest increase in sales. In politics, British Prime Minister Theresa May reportedly told lawmakers that she does not want to rule out a no-deal Brexit, because the possibility serves as a bargaining chip. Finally, the U.S. Treasury announced it expects to borrow $365 billion in privately held net marketable debt during the Q1 2019 and plans to borrow $83 billion during the Q2 2019.

Markets should be quiet again today despite more treasury auctions, as the Refunding announcement ahead of the latest FOMC decision will be made tomorrow. Today's economic calendar kicks off at 8:30am ET with advanced economic indicators for December. The S&P/Case-Shiller Home Price Index for November is due for 9AM ET release, with expectations for increases of 0.4% MoM and 4.8% YoY versus 0.4% and 5.0% previously. January consumer confidence is expected to rise at 10AM, when Q4 housing vacancies will be released. Day One of the FOMC meeting gets under way in Washington, and the UK parliament is scheduled to debate and vote on PM's May's latest Brexit plan sometime during the day. We begin today with the 10-year at 2.74% and agency MBS prices little changed.

Employment and Personnel Moves

XINNIX will elevate your business with their unique model of training, accountability and coaching, and they have the numbers to prove it!  Here’s their 2018 scorecard. Leaders looking to grow their teams hired an average of 1.5 LOs within 90 days of completing the XINNIX RECRUITING WORKSHOP. Over the course of an 8-week XINNIX Performance Program, Experienced LOs saw a 47% increase in loan applications. New Loan Officers averaged 4.76 loan applications in their first month of production with XINNIX. With results like these, it’s no wonder XINNIX is growing. They have welcomed two new National Sales Executives, JoAnne Skerritt and Andy Van Wagnen, to serve the Northeast and the Midwest. And they’re not done growing yet! XINNIX is looking to hire National Sales Executives in Texas and the Southeast. CLICK HERE to learn more!

“SocialSurvey wants to thank the mortgage industry for a fantastic 2018. We are excited to now serve 150 lenders representing over 30,000 Loan Officers. Our platform has expanded from reviews and reviews sharing to now include social media monitoring and listings management. To keep up with the demand, we are hiring several Regional Vice-Presidents of Business Development with dedicated sales territories. If you have a proven track record of selling technology or services into the mortgage vertical, this is a unique opportunity to part of an amazing growth story.” Send confidential resume and contact info to Gaby Mota to learn more.

Congrats to 24-year vet Dave Moore who is Hudson United Mortgage Services, LLC’s new Producing Manager/Director of Recruiting. Hudson United Mortgage Services is a full-service mortgage banker/broker licensed in New York, New Jersey, Connecticut, and Florida that is growing its footprint in Westchester County.

M&A and Current Lending Environment

Dr. Rick Roque, a retail mortgage banker whose efforts between 2015-2018 has helped to identify, add, and onboard more than $2.8B in production for companies he has consulted with, had some thoughts on the current state of the retail lending market and on the status of Mergers & Acquisitions (M&A) in the mortgage industry. Dr. Roque helps mortgage firms setup, support and acquire larger sales production teams and independent mortgage banks in target markets.

“Currently loan production in the mortgage industry is just over where it was in 2000. With a rising rate environment, higher operational costs for companies, and a competitive landscape, Loan Officers and Production Managers are operating in a challenging environment. Effective operations, relevant technology, and engaging marketing are essential tools an originator needs in today’s climate."

Rick’s note went on to discuss what LOs and branch managers should look for in a mortgage bank. “Mortgage banking is certainly evolving rapidly and there are three pieces that a mortgage bank must have to operate successfully in today’s market with an eye on the future. In the past a solid operation was really the cornerstone of what an originator needed from their company. Today, ‘good operations’ is still the most fundamental piece of what makes up a good mortgage bank. The next piece is technology: Creating a seamless, successful, and smooth experience for the consumer is the name of the game; you achieve that with great technology solutions that are applied effectively. Technology has lagged a bit in the mortgage business but that is changing and if you don’t have good technology solutions you are in danger of becoming irrelevant. The third piece of the puzzle is relevant marketing that helps connect you to your borrower and referral sources on an ongoing basis is critical. Gone are the days of passing out rate sheets and waiting for someone to call you. Today you must have impressive marketing collateral, be relevant on social media, do videos to get the word out, and generally keep putting yourself out to the world to effectively market yourself from a good digital platform.”

Rick wrapped by answering the question, “What is the good news in a flat to negative growth mortgage industry over the next 2 years?” “The good news is that we are still operating with historically low interest rates and working in a trillion-dollar industry that is one of the bedrocks of the U.S. economy. The constriction in our industry has led to loan officers and companies that were not positioned for a harder environment to exit the industry and slim down competition. Interest rates will rise and fall, but a loan officer that is staying relevant and doing the things necessary to maintain & grow their business should not be overly concerned with market conditions. A loan officer positioning themselves at the right company is a major ingredient to their success."

Pentagon Federal Credit Union, the nation’s third-largest credit union (after Navy Fed and State Employees), kicked off 2019 with a unique expansion move: A merger with the $383 million-asset Progressive Credit Union that gives PenFed an open charter, allowing anyone nationwide to join. Designated by the National Credit Union Administration as an “emergency merger,” the acquisition took effect Jan. 1 and brings an end two years of losing over $100 million for New York-based Progressive, which was plagued by bad taxi medallion loans that led to declining revenues. (Would you lend to a taxi business?)

But a debate has emerged within the financial industry over PenFed Credit Union’s recent acquisition of an institution with an open charter as part of an "emergency merger" authorized by the National Credit Union Administration (NCUA). Independent Community Bankers of America President and CEO Rebeca Romero Rainey urged House leaders to investigate NCUA’s reasoning in approving the merger.

Banks are being pressured. The OCC reported that several fintech charter applications are nearing completion for preliminary applications. Some states, such as NY, have filed lawsuits stating the OCC is overstepping federal authority to regulate smaller entities. British fintech firm Monzo is preparing to launch in the US soon. Monzo touts itself as the bank of the future, with over 1mm customers now using debit cards issued by it and its app to manage their money. And digital lender Affirm, which specializes in small loans with short-term repayment plans, has announced a pilot test for its customers to deposit money into a savings account with a 2% annual rate via their app. The founder of Affirm was a co-founder of PayPal.

Meanwhile, depository M&A continues. SmartBank ($2B, TN) will merge with Entegra Bank ($1.7B, NC) for about $158.2mm in stock (100%) or 1.19x tangible book. The “merger of equals” expands the geographic footprint and increases both size and scale. Glacier Bank ($12B, MT) will acquire The First National Bank of Layton ($326mm, UT) for about $85mm in stock (100%) or 2.16x tangible book. In Arkansas the Farmers & Merchants Bank ($1.1B) will acquire Integrity First Bank ($525mm). 4) Heartland Financial USA ($11.5B, IA) will acquire Bank of Blue Valley ($725mm, KS) for $93.9mm in stock (100%) or 1.88x tangible book. KeyBank ($139B, OH) will acquire the digital consumer lending business of Laurel Road Bank ($623mm, CT). (Laurel Road has originated over $4B in loans since launching in 2013.)

First Financial Bank ($3.0B, IN) will acquire Heritage Bank USA ($904mm, KY) for $128.3mm in cash (50%) and stock (50%). In Florida VyStar CU ($8B) will acquire Citizens State Bank ($280mm). In Georgia NorthSide Bank ($126mm) will merge with and into First National Community Bank ($162mm). First-Citizens Bank & Trust Co ($35B, NC) crossed the border and will acquire First South Bank ($237mm, SC) for about $37.5mm in cash and stock. In the Beehive State, State Bank of Southern Utah ($1.1B) will acquire Gunnison Valley Bank ($71mm). In balmy Wisconsin State Bank of Cross Plains ($977mm) will acquire Union Bank & Trust Co ($259mm). PNC Bank ($369B, DE) will acquire investment banking and capital markets services company Ambassador Financial Group (PA).