Underwriters will want to know that IBISWorld has identified the top ten sectors with expected rapid growth price in 2016. Legal services are expected to see an increase next year, as roughly 66 percent of revenue generated by industries in legal services comes from business and corporate clients. Cybercrime and fraud will tick prices up 3.3 percent and employment law services should rise 3.2 percent in 2016. Turning towards the construction sector, the cost of plastering and drywall services should rise 7.7 percent next year, along with painting services and landscape architecture and design services at a 5.9 percent and 3.4 percent increase, respectively.

PHH announced the completion of its $100 million buyback program, announced on Nov. 4, 2015. The company repurchased 6.35 million shares at an average price of $15.75. $150 million remains on the company's $250 million repurchase authorization, which will be outstanding until year-end 2016. The company noted that the decision on whether to repurchase additional shares will be based on regulatory developments, the company's capital structure, liquidity position, and other potential uses of cash including investments in growth. The pace of the buyback was quicker than we had modeled. However, because of the weak results we forecast in 4Q15 and in 1H16, the quicker pace has a limited effect on our EPS estimates but is more accretive to book value than our forecast because of the repurchase price.
 
Ocwen agreed to pay a fine for $2 million settling yet another legal issue. "The U.S. Securities and Exchange Commission said Ocwen misstated its profits in parts of 2013 and 2014 by using asset values provided by a Cayman Islands firm that former Chairman Erbey also ran, rather than an independent company, as it had stated." A note from the company stated, "The terms include that Ocwen, without admitting or denying liability, will pay a $2.0 million civil money penalty and consent to the entry of an administrative order. As previously disclosed in the Company's SEC 10-Q filing in October 2015, Ocwen has reserved funds for payment of this settlement...'We are pleased with the resolution of this U.S. Securities and Exchange Commission's (SEC) investigation. As previously disclosed in our October 2015 SEC 10-Q filing, funds have already been reserved to address this settlement. Ocwen remains committed to full compliance with all legal and regulatory requirements and will continue to fully cooperate with regulators on any matter brought to its attention.'"
 
Recall that the Federal Housing Finance Agency (FHFA) issued a final rule revising its regulations governing Federal Home Loan Bank Membership. This final rule adopts several provisions including, but not limited to preventing the circumvention of the statute's membership restrictions by ineligible entities by defining the term "insurance company" to exclude captive insurers. I mention this because the residential lending business is very aware of these companies and any news that directly impacts residential Real Estate Investment Trusts.
 
Since the start of the year REIT stocks are down (aren't all stocks down due to global worries about dragging economies?): Invesco -11%, Annaly -6%, Two Harbors -20%, for example. In fact lots of mortgage-related stocks are down since January 1, bucking the thinking that another refi boom will help bottom lines, and hopefully no one out there has their entire 401(k) in Nationstar or Stonegate stock.
 
This comment includes Redwood Trust. This year, which is less than three weeks old, has seen RWT -20%, down over 6% yesterday alone. Redwood plans to restructure its conforming loan operations by discontinuing the acquisition and aggregation of conforming loans for resale to Fannie Mae and Freddie Mac, and instead "focus on direct conforming-related investments in mortgage servicing rights and risk-sharing transactions" while maintaining its approvals with the agencies. Redwood also plans to implement a workforce reduction, which primarily impacts employees engaged in and supporting the Company's residential mortgage loan business. The reduction represents approximately 15% of the company's fixed compensation expense at December 31, 2015 and a headcount reduction of 25%.
 
"Redwood's conforming business activities utilize less than 5% of the Company's capital, while its investment portfolio, which utilizes 85% of the Company's capital base, continues to exhibit strong credit performance and remains a steady and growing source of income." "Our conforming loan purchase and sale operations generated a pre-tax loss of $10 to $11 million in 2015 or a loss of $7 to $8 million on an after-tax basis based on our preliminary full-year 2015 results. This included interest and fees of approximately $12 million associated with $5.2 billion of loan purchases, and operating expenses of approximately $22 million," said Christopher Abate, Chief Financial Officer. 
 
So Redwood announced that it will restructure its operations by discontinuing the acquisition of conforming loans for resale to Fannie Mae and Freddie Mac. This business reduced EPS by $0.10 a share in 2015. The restructuring will also free up $45 million of capital. The company noted that it will focus on direct conforming-related investments in mortgage servicing rights and risk-sharing transactions. RWT's announcement is not surprising given the competitive correspondent lending market. But it remains to be seen how the company will now participate in GSE credit-risk-sharing transactions.
 
MI companies are certainly interested in risk sharing developments, so let's see what they've been up to lately.
 
MGIC has published its operating statistics for December. New notices dropped 10.5 percent YoY but increased 19.9 percent MoM and cures of 5,258 were down 13.7 percent MoM. The cure ratio did decline to 79.7 percent from 110.7 percent in November. The ending delinquent inventory of 62,633 was up 0.3 percent MoM from 62,445 compared to a 2.7 percent decline in November. Ending delinquent inventory was down 21.6 percent YoY and paid claims increased 0.9 percent MoM versus a drop in November of 11.9 percent. Net rescissions and denials rose to 81 from 63 the month prior and new insurance written equaled $3.3 billion in December, up from $3 billion in November.
 
Radian announced a $100 million repurchase program. The authorization is effective immediately, may be transacted through a 10b5-1 plan, and will expire on December 31, 2016. The repurchase program is about 4% of the market cap. As of 3Q15, RDN had $710 million of holding company liquidity. In December, the company contributed $375 million to Radian Guaranty and an affiliate to comply with PMIERs, bringing holding company liquidity down to $335 million. The company also has roughly $250 million in debt maturities coming due in 2H17.
 
Arch MI has published its winter 2016 Housing and Mortgage Market Review, reporting that the likelihood of home prices to decline nationwide over the next two years is 6 percent although oil & natural gas producing states are at a higher risk due to declines in energy prices. This includes states like North Dakota, Wyoming, West Virginia, Texas and Alaska. North Dakota had the highest Arch MI Risk Index due to the 2.9 percent decline in employment over the past year and home prices are estimated to be overvalued by 20 percent. Texas has the top five riskiest MSA's with a 26-36 percent chance of house prices declines in several areas.
 
Its MBS business wasn't mentioned, but Barclays will cut about 1,000 jobs in investment banking worldwide and close its cash equities business in Asia as new Chief Executive Jes Staley wields the axe in a bid to reduce costs and boost returns.
 
Keeping with related news U.S. Treasuries, and other fixed-income securities like MBS, had another good day Wednesday. Not that anyone cares about our economic data anymore, but we continue to receive news that our economy is NOT zooming along: consumer price indices for December missed expectations while the housing starts/building permits data were mixed. Housing starts were less than expected but building permits were higher - although quickly explained away by noting the entire gain was due to a 62% jump in the Northeast and that was likely due to a change in tax or building codes
 
Today, as the East Coast girds its collective loins for "stormzilla," Initial Jobless Claims came in +10k to 293k, the highest in quite some time, versus the prior week. And the January Philadelphia Fed was "-3.5". We closed our benchmark 10-year Wednesday at 1.98% and this morning it is hovering around that level with agency MBS prices unchanged.

Jobs and Announcements

Speaking of growth, Arch Mortgage Insurance is actively seeking a passionate and enthusiastic sales representative for the South Texas territory to join its dynamic sales team! "If you are an experienced, results-driven sales professional in the mortgage industry with strong contacts in Texas and a proven record of developing and implementing sales strategies to expand and sell new business, apply today at resumes@archmi.com. Arch Mortgage Insurance is the U.S. based mortgage insurance division of Arch Capital Group Ltd., a leading insurance and reinsurance specialty lines underwriting company operating through its subsidiaries located worldwide. We are committed to our employees and offer competitive compensation, valuable benefits and an energized culture of talented professionals!"
 
AmeriSave Mortgage Corporation is expanding its Traditional Retail and Consumer Direct channels in the first quarter of 2016 and has an immediate need for Retail Loan Officers and Producing Sales Managers in Georgia, North Carolina, Florida, California and Michigan and Call Center Loan Originators in Atlanta, Charlotte, Detroit and Louisville. For retail LOs "we foster a culture that promotes teamwork with access to Senior Leadership and Underwriting teams, have an aggressive non-bank lender compensation plan with a guaranteed monthly forgivable draw and purchase leads provided daily, a dedicated full service Marketing Department with company provided personal website, and in-house Processing, Underwriting, and Closing. Call Center LOs are "invited to leverage our progressive technology platform and lead generation machine.  AmeriSave is willing to provide training and licensure for candidates in Call Center positions with Mortgage Sales Experience." NMLS ID #1168; applicants should contact Jason Hultgren, SVP.
 
And do you want to work for a company that is not only expanding but is TRID ready? Assurance Financial, Baton Rouge, Louisiana, is hiring branch managers and MLOs in Colorado, Arizona, New Mexico, Louisiana, Texas, Mississippi, Alabama, Tennessee, Florida, Georgia, Arkansas, North Carolina and South Carolina. The company has a 15-year history of closing loans on time and is not letting TRID interrupt that record. Paul Peters, CMB, Sales Recruiting Manager, reports that Assurance has closed several hundred loans under TRID without any significant delays. For more information, contact Paul Peters (225-239-7948) or visit www.LendTheWay. com.
 
In related news Hammerhouse, LLC has launched its 6th Annual Survey for Mortgage Leaders and Producers. The 32-question survey focuses on the "Six Core Components"- Business, Leadership, Culture, Operations, Technology, and Geography. "With our 6th survey, we will continue to analyze year over year trends relative to the concerns, needs and wants of the life blood of this industry: YOU, the Leaders and Producers. Additionally, we will home in on what creates alignment and the right Model Match for long term performance and retention. The results will be posted on March 31st. Participation is free, takes about 3 minutes, and respondents will be entered in the raffle for a free iPad. Click here to take the survey.
 
In personnel changes, congratulations are due to Bill Beckmann, President and Chief Executive Officer of MERSCORP Holdings, Inc. and Mortgage Electronic Registration Systems, Inc., on his appointment by the MBA to the leadership role of Chairman of the Mortgage Industry Standards Maintenance Organization (MISMO).
 
And congrats to Bela Donine who Impac Mortgage Corp. announced is rejoining Impac as Executive Director of Channel Development for the Company's AltQM product line and will report to Bill Ashmore, president. Bela will be responsible for the positioning and growth of the AltQM programs in the mortgage marketplace, the refinement of the Company's AltQM strategies and goals, cultivate existing key customer relationships, identify new business opportunities, oversee the development of AltQM training curriculum, content and approach and work with various Impac Committees specific to AltQM.