When I was in my 20s and into my 30s, I think I had about $3,000 in my retirement account - hardly enough now to even pay for the line-caught salmon for my cat Myrtle for a year. But in down payment news CNBC is telling us that people in that age group are tapping into their retirement money to buy homes. The survey size is only 600, which by my capital markets background math is about 12 people per state – is that really representative? Regardless, it is worth a skim for originators working with first-time home buyers.

Conference

MBA's Annual Convention and Expo is in Washington, DC this October. “Your participation and engagement with MBA has never been more important as so many issues stand before us as we head into the mid-term elections. The early registration deadline for the convention is tomorrow, Wednesday, August 1. This is always an impressive event and this year is no exception. Featuring some of the brightest minds in the mortgage banking and finance industries - including Dr. Janet L. Yellen, Geoff Colvin, The Honorable Benjamin Carson, M.D. and The Honorable Mel Watt - the program is sure to live up to expectations. Register today to save big, and make sure you bring members of your staff.”

Legal News

“Amrock, Inc., owned by Rock Holdings, Inc., claims it has evidence that HouseCanary, an analytics firm for property and real estate valuation, committed fraud during a $706.2 million jury verdict trial earlier this year.” For those playing along at home, Rock Holdings Dan Gilbert’s parent company of Quicken Loans Inc.

A few months ago, the Board of Governors of the Federal Reserve System issued a proposal to amend the rules implementing Section 13 of the Bank Holding Company Act of 1956 (the “Volcker Rule”). Shortly thereafter, the other federal agencies responsible for implementing the Volcker Rule followed suit. In general, the Proposed Rule would provide regulatory relief to banking entities subject to the Volcker Rule by tailoring its application, simplifying certain standards and requirements, and reducing compliance burden. Comments on the Proposed Rule are due 60 days after its publication in the Federal Register. Read the Morrison & Foerster Client Alert for details.

Congrats to Wells Fargo whom the OCC has released from its consent order. Mostly dealing with auto loan practices, but it touched on home lending.

In FHFA news, the headlines blared “FHFA Ruled Unconstitutional” but in reality, two judges ruled president couldn’t remove the head of the FHFA but did rule that government could sweep earnings. The ruling is sure to make no one happy. The FHFA & Congress are not happy (no ability to remove the director), and shareholders are not happy since profits will continue to be swept. Stay tuned.

On July 27, Politico reported that a FHFA employee brought an Equal Employment Opportunity (EEO) claim against FHFA Director Mel Watt after he purportedly made inappropriate sexual advances. In response, FHFA Director Watt said that he is “confident” that the investigation will conclude that he has “not done anything contrary to law.” Analysts believe this increases the likelihood of Director Watt departing before the end of his term in January 2019, which in turn could expedite anticipated FHFA policy shifts intended to modestly shrink the role of the GSEs.

Isaac Boltansky with Compass Point Research and Trading writes, in part, “At this juncture, there are five key questions. Will FHFA Director Watt leave before the end of his term? At a minimum, we believe this investigation makes it difficult to envision Director Watt staying beyond his term. Will the White House try to push Director Watt out before his term ends? The White House could either directly or indirectly challenge Director Watt. The White House is likely to expedite its timeline for nominating a FHFA Director replacement and could become more vocal on the matter. When will there be clarity on the investigation? Under federal guidelines, EEO investigations must be completed within 180 days and the documents cited by Politico suggest that the investigation has been ongoing for over a month…the investigation is being handled by the Postal Service Inspector General rather than the FHFA’s Inspector General.

“Who will the White House tap to head the FHFA? The White House will ultimately make a FHFA Director nomination, but the politics and timeline suggest that a transitional figure may be necessary. Our sense is that the White House’s decision will be driven by Director Watt’s next step. If Director Watt leaves prior to the conclusion of his term in January 2019, then the governing statute suggests that the White House will need to tap one of three specific deputies to serve in an acting capacity. If Director Watt leaves at the end of his term or thereafter, the White House could either tap one of the designated deputies or conceivably use the Vacancy Act to designate a Senate-confirmed individual as the acting head of the FHFA.

“What are the practical policy implications? Our sense is that the investigation into Director Watt increases the odds of an early departure, which in turn could expedite the transition to a new FHFA aimed at narrowing the footprints of Fannie Mae and Freddie Mac. Ultimately, we believe the next FHFA Director will work to modestly narrow the GSE footprint in the market, which is likely to include a reduction in multifamily lending activity, a broader consideration of the ‘charter creep’ conversation, and a curtailment of certain residential product offerings (e.g., cash-out refis, investment property).”

From Pennsylvania comes news that five mortgage foreclosure companies and two company owners are facing a lawsuit over allegations that they deceived homeowners and consumers into mortgage loan modifications. The lawsuit is seeking injunctive relief and restitution of more than $280,000 for all consumers who are currently or have ever been in a transaction with any of the companies or their affiliates. The Pennsylvania attorney general filed the suit in the Philadelphia County Common Pleas Court. The complainants entered into mortgage modification agreements with companies including GMK Solutions, the Foreclosure Law Center, Century Legal Group, Alia Law Group, and the Law Offices of Drew Alia. These entities were owned by Mark Goldstein and Drew Alia.

Capital Markets

A quiet start to the week saw the American 10-year close +2bps to 2.98% as headlines revolved around Japan's 10-yr yield edging above 0.10%, spurring the Bank of Japan to conduct its third unlimited purchasing operation of the past week. While the BoJ is not expected to alter its policy rate (-0.10%), some of its policy tools could be modified, and a downgrade to the inflation outlook is expected. The only other newsworthy items of note were Pending Home Sales increasing well above 0.2% expectations after decreasing 0.5% in May and the U.S. Treasury announcement it plans to issue $329 billion in net marketable debt during Q3 while issuance in the Q4 is expected to reach $440 billion.

This morning we have a lot of news in the U.S. We’ve had June’s personal income and spending (both +.4%, as expected), as well as the Q2 Employment Cost Index (+.6% versus the expected +.7%). For retail news we have Redbook same-store sales for the week ending July 28. The S&P/Case-Shiller Home Price Index for May will be released at 9AM ET and is expected to increase 0.2% MoM and 6.5% YoY, essentially the same figures as April. Chicago PMI for July will be released at 9:45AM followed by July consumer confidence at 10AM. Finally, day one of the two-way FOMC meeting will kick off in Washington, D.C. – don’t look for any change tomorrow. Tuesday starts with the 10-year yielding 2.95% and agency MBS prices better a tad versus Monday’s close.

Lender Products and Services

As the MBA’s recent letter to HUD indicates, Ginnie Mae’s orphaning of loans that were in underwriting or closed prior to the rule change prohibiting lenders from pooling unseasoned VA-guaranteed refinances remains an issue for the industry. Mid America Mortgage stands ready to help lenders stranded with these now-ineligible loans by purchasing them through its Whole Loan Trading Group. To be eligible for purchase, loans must be performing and have received a VA guaranty. For more information, please contact Michael Lima, Managing Director.

Are you an independent mortgage lender looking for a digital mortgage solution partner? Check out Maxwell, they could your perfect solution. Maxwell may be has been making waves in the industry with their innovative product and company approach to create partnerships (not client relationships) with their lenders. Click here to learn more.

New Penn Financial’s lineup of proprietary non-QM products now includes the SMART Series - four distinct product offerings designed to meet the varied needs of specific borrowers. SmartEdge is a product for borrowers qualifying full doc with shorter significant credit event seasoning and permits asset-amortization income calculations with a FICO 620+. Fixed 30, ARM 5/1, 7/1, 10/1, all optional interest-only, available with down payments as little as 10%. With loan amounts up to $3 million, there’s room in this product to find a great loan for a variety of borrowers. Call your rep for more information or go to www.gonewpenn.com.

“Next time you’re getting your annual check-up or squirming in the dental chair, let your doctor or dentist know that we can help them, too! Stearns Wholesale makes it easier for Docs and Dentists just out of their residency or fellowship to qualify for a loan by excluding certain student debt when calculating monthly debt-to-income ratios! We are one of the few lenders to offer Doctor Loans that offer borrowers a higher loan limit and lower down payment options.  No problem if your borrower is still in their residency or fellowship, they are still eligible to qualify. It’s not brain surgery… Stearns Wholesale will get these highly skilled individuals into the home of their dreams with the least pain points possible! Contact us to learn more about our Doctor Loan Program.”

The attrition rate in the mortgage industry is at an all-time high and we know a few popular reasons for it. One big thing, Baby Boomers are going into retirement daily, -10,000 people a day to be exact. In addition, the FREE Agent mindset of loan officers. With this high turnover in the sales force, Jim McGrath, veteran headhunter and recruitment trainer decided to open the attrition flood gates this month and dive into who and why mortgage professionals are jumping ship in the height of the season. With the high attrition rates (aka: Talent Run-Off), Jim addresses the top reasons why talent runs off to a competitor and how sales managers can leverage their leadership style to recruit, retain and train talent. Learn how to stop bleeding red ink and increase your net worth as a sales leader and retain the loyal top performing loan officers on the Mortgage Recruiting Coach – Talent Run-Off | Stop the Madness.

Personnel Moves

Yes, there are plenty of cutbacks around the industry, the latest batch said to be at National MI. Middle management particularly seems to be at risk. And Providential Financial’s CEO Craig Blunden announced that "…the continued weakness in mortgage banking fundamentals has resulted in necessary adjustments to our mortgage banking business model. During the 2018 fiscal year, we have reduced our retail production offices by 25%, from 12 to nine and we have reduced our mortgage banking staffing levels by approximately 32%.” But there are also plenty of promotions as well.

Altisource Portfolio Solutions S.A. announced the appointment of Justin Vedder as Chief Operating Officer, Origination Solutions, where he will be “responsible for the growth of Altisource’s Origination Solutions business which brings together the integrated and consultative products, services and solutions needed by mortgage market participants of all sizes throughout the loan origination and secondary market execution process.”

From Wisconsin comes news that Eric Egenhoefer, the CEO of Waterstone Mortgage Corp. who founded the company in 2000, has resigned effective 9/15. Waterstone Mortgage is a subsidiary of Wauwatosa-based WaterStone Bank SSB, which is part of Waterstone Financial Inc. A.W. Pickel III, who was recently hired as president of Waterstone Mortgage, will take on Egenhoefer’s duties.

Primary Residential Mortgage, Inc. (PRMI), which funded over $5.4 billion in home loans in 2017, announced the promotion of four of its executives: Tom George as EVP and chief production officer, Ruth Green as EVP and chief operations officer, A.J. Swope as EVP of secondary marketing, and Mathew Whitebrook as SVP of capital markets.