Depository banks know that, per the AARP, more than 67% of US assets are controlled by individuals age 50+, with this group representing more than 67% of all bank deposits. If you don’t think that lenders view reverse mortgages as a growth industry, you’re wrong – it may be the last chance to lend to this generation, right? There is a lot of bank M&A going on and it is not always confined to banks: Fifth Third Bank ($141B, OH) will acquire Retirement Corporation of America (RCA), a registered investment adviser providing retirement education & planning nationwide.

HomeStreet Bank ($6.2B, WA) has agreed to pay $500,000 to settle SEC charges of improper hedge accounting violations, including unsupported adjustments to effectiveness testing that led to more favorable accounting practice.

Citigroup Inc. ($222 billion) saw its mortgage units fined $28.8 million for keeping home borrowers in the dark about options to avoid foreclosure and making it difficult for them to apply for relief, per the CFPB. CitiMortgage will pay an estimated $17 million to compensate wronged consumers, as well as a civil penalty of $3 million; CitiFinancial Services will refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million. The CFPB said the subsidiaries neither admitted nor denied the findings in the consent orders. (We've heard that one.) The lesson? Don't give "the runaround to borrowers" on mortgage servicing by keeping borrowers in the dark about options to avoid foreclosure or making it difficult for them to apply for relief.

The Banc of California ($11 billion in assets) had its CEO and Chairman Steven Sugarman "resign." It doesn't help that the company is being investigated by the U.S. Securities and Exchange Commission about whether the bank misled investors. Banc of California has named Hugh Boyle, its chief risk officer, as its interim president and CEO. J. Francisco A. Turner, chief strategy officer and principal financial officer, will partner with Boyle as interim chief financial officer and president. Robert D. Sznewajs, the board's chair of the Joint Audit Committee, will assume the role of chairman.

The returns have been good, but stockholders have $100 million less since the Banc of California ponied up that sum for the naming rights on Los Angeles's new soccer stadium. There are concerns raised about deals benefiting Sugarman's family and board members, and Sugarman's brother is a minority investor in the soccer team. The bank's shares plummeted in October after the financial website Seeking Alpha published an anonymous short seller's report alleging ties between its leadership and an imprisoned con man.

There is more negative press about Wells Fargo's retail bank behavior. Bloomberg reports that WFC charged some homebuyers fees to extent promised rates when the bank failed to process their mortgage applications on time.

Another day, another settlement. Societe Generale SOGN.PA agreed to pay a $50 million civil fine to settle U.S. claims that it defrauded investors in connection with the marketing and sale of residential mortgage-backed securities. The U.S. Department of Justice announced the settlement on Friday, and said the French bank acknowledged having committed misconduct.

A U.S. judge refused to dismiss a lawsuit seeking to hold Deutsche Bank AG liable to investors, including dozens of portfolios from BlackRock Inc and Pacific Investment Management Co. (PIMCO), for losses on poorly underwritten residential mortgage-backed securities. The proposed class-action lawsuit sought to recover "significant monetary damages" arising from Deutsche Bank's alleged "failure to discharge its essential duties" as trustee of 62 trusts created between 2004 and 2008, and which issued notes backed by about $90.3 billion of home loans. U.S. District Judge Jesse Furman in Manhattan denied its request to dismiss representations-and-warranties, servicer-notification and event-of-default claims.

In CFPB news, last week republican senators Deb Fischer (NE), Ron Johnson (WI) and John Barrasso (WY) introduced a bill (S. 105) that would amend the Consumer Financial Protection Act of 2010 to replace the CFPB's current single director with a bipartisan, five-member board. The proposed leadership structure would be like that of other financial regulators, including the FDIC, SEC and CFTC.

Would you like to advise the CFPB? My cat Myrtle pointed out that the CFPB recently set up three "advisory groups"-the Consumer Advisory Board, the Community Bank Advisory Council, and the Credit Union Advisory Council-in anticipation that the groups would provide information about emerging trends and practices in the consumer financial marketplace and to open lines of direct communication with smaller financial institutions. Last week the Bureau requested applications seeking to fill vacancies in all three groups, which have seats that will become vacant in the fall of 2017. Per the post, the CFPB is seeking individuals with expertise in a variety of consumer protection issues, including representatives of banks serving underserved communities, representatives of communities impacted by higher priced mortgages, employees of credit unions and community banks, and academics.

Mortgage rates...

Longer term mortgage rates are set by supply and demand - the magical hand. So what if the New York Fed, which has been buying agency MBS to the tune of $1-2 billion a day recently, stopped? Last week Philadelphia Fed President Harker reiterated that the Fed should consider ending reinvestments once the Fed funds rate reaches 1%, consistent with other earlier statements from Fed officials.

And look at the impact the FHA MIP about-face had on things. The Ginnie market has been roiled by the surprise FHA MIP cut of 25bp weeks ago followed by its rollback last Friday. And there are prepayments to grapple with based in changes like that: the rollback removes the longer-term impact but short term disruptions may alter January and February FHA prints. MIPs present an easy lever for reducing the government mortgage footprint, and Congressional Republicans have called for them to go higher.

Unless you've been living under a rock you know that Donald Trump is now our president and that is all that has been talked about for some time now. So let's change the subject to something that NEVER gets talked about here, interest rates and the housing market. The Federal Reserve has talked nonstop about how they would like to see inflation reach their benchmark rate of 2% and it looks like that has finally happened. Last week we learned that both headline and core inflation rose above 2 percent over the year for the first time since mid-2014. This bodes well for the future of interest rate hikes - if you want to see them.

The housing market has continued to improve in most areas. Housing starts jumped 11.3% in December. Wells Fargo noted that, "The jump was not all that surprising given November's drop, but the bounce back was larger than expected." It also seems that this growth is set to continue. "Looking at 2016 as a whole, the annual average for permits is running ahead of starts, which points to a pickup in activity in the year ahead."  However, existing home sales are expected to fall for the month of December. On top of that, "Homebuilder confidence retreated 2 points in January from its cycle high of 69 in December, as the recent jump in mortgage rates slightly offset builders' post-election confidence bump."

Breakeven inflation expectations for five-year and 10-year horizons have risen since election day-by 31 basis points for the five-year and 27 basis points for the 10-year. This is important to note for the future of FOMC interest rate hikes. Some people are projecting that inflation is going to continue its rise, however we have witnessed FOMC members consistently over-forecast inflation as well as their response via the fed funds rate. Policy proposals to scale back financial regulations and reduce the tensions between regulators and the regulated, however, may free up bank capital and allow for greater lending.

Moreover, if there is a greater expectation for domestic economic growth, then both bank and non-bank credit may open up. Thus, interest rates may not rise as much or as quickly as some analysts are projecting. Perhaps the increase in inflation will not be sustained significantly in the future. If so, then the Fed may be able to live with less than the three funds rate increases projected for 2017.

For example, Monday U.S. Treasuries and agency MBS rallied/improved, and rates moved back to where they were in the middle of last week. The MBS market opened the week in impressive fashion amidst light volumes, closing tighter on the day led by lower coupons which were supported by solid demand with treasuries rallying in "risk off" fashion ahead of today. The 10-year improved more than .5 in price to close yielding 2.40% while the 5-year note and MBS prices improved .250-.375 depending on coupon and maturity.

This morning we're influenced by overseas news. Britain's Supreme Court has ruled that the UK government must hold a vote in parliament before beginning the process of leaving the European Union. Turkey raised rates (9.25% overnight funds), and the Italian Constitutional Court ruled on the legality of current election laws.

In the good ol' USofA we'll had the Philadelphia Fed Non-Manufacturing Indices for January. Coming up are Markit Manufacturing PMI and December's Existing Home Sales. And let's not forget the Senate Banking Committee is scheduled to vote on Dr. Ben Carson's nomination to be HUD Secretary. In the very early going the 10-year is chopping around 2.43% and agency MBS prices are worse .125-.250 versus last night.

Yes, loan officers have a sense of humor and a sense of advertising & marketing. This short video is an example from Skyline Home Loans Sales Manager Troy Williams.

Jobs and Announcements

"Due to remarkable growth, Embrace Home Loans has exceptional opportunities for mortgage sales professionals with a background in either direct or retail lending. Embrace is the place retail sales professionals can expect to thrive both personally and professionally through our values based culture, respect and awareness of the challenges facing today's loan officers, a full catalogue of products and competitive compensation/benefits packages. Licensed in 46 states plus DC, Embrace ranks in the top 25 private mortgage lenders and top 25 FHA originators in America. For 10 straight years Embrace has achieved a 98% Customer Service Rating and is 7 times recognized by Fortune as a 'Top 25 Mid-size Companies to Work for in America.' If you are interested in working with a supportive, dynamic and productive company contact Jeff McGuiness, Chief Sales Officer."

Orange Coast Title Company, an industry leader since 1974 and one of the largest independently owned title insurance companies, is growing again and has an excellent opportunity for a National Sales Executive. As our National Sales Executive, you will acquire, build, and maintain strong, long-lasting client relationships with the top mortgage lenders in the country. The ideal candidate will possess a broad knowledge of the loan origination and servicing space, have sales experience with a proven track record of exceeding goals, and be self-motivated to succeed in a fast-paced, competitive environment. Interested candidates should send their resumes to Tim Curtis, National Sales Manager.

Stearns Lending LLC, one of the fastest growing privately held mortgage lenders, continues its expansion. "Following strong performances in its Wholesale, Retail and Strategic Alliance channels in 2016 Stearns is looking to add Wholesale Account Executives, Retail Branch Managers, Sales Managers, and Mortgage Loan Originators in key markets across the United States, throughout 2017. In keeping with its reputation as an industry leader in technology, the Company recently launched Stearns' Secure Income and Asset Verification technology and workflow enhancements that revolutionize the mortgage experience for its customers, brokers and business partners by making the home loan process faster, simpler, more transparent and more secure. With its strong historical focus on purchase volume, closing loans on time, and exceeding expectations, the company has become home to many of the most talented mortgage professionals in the industry." Contact Brad Hoke, to learn about Stearns' career opportunities.

Download your complimentary copy of XINNIX's white paper, "Development of the Next Generation of Loan Officers." For the past 15 years, XINNIX has empowered new loan officers with the skills they need to launch successful careers through its ORIGINATOR program. XINNIX Certified originators average 3.1 loan applications in their first month.

Moving from jobs to products... 

In warehouse news, First Tennessee Warehouse Lending announced expanded support for construction loans.  Now best-in-class reliability and ease-of-use comes with even more flexibility. Frankly, warehouse lines often seem like they are all the same.  But First Tennessee can really make a difference with expanded hours for wire transfers, virtually perfect reliability, broad product support, high marks for ease-of-use, and the knowledge and experience needed to smoothly and quickly deliver your securities and distribute your cash.  Whether you originate 100 loans per month or 1,000, First Tennessee will make your life easier. You can meet them at the IMBA in Palm Springs, or call Scott Walker (901.759.7770).

Parkside Lending has expanded its guidelines on FHA, and you are going to want to take note.  "Effective January 23, we have removed all DTI overlays and will now accept ratios evaluated by FHA TOTAL Scorecard/DU. In addition, our minimum FICO is now 620 and we allow downgrades to manual underwrites per FHA Handbook. For more details, contact your AE or sales@parksidelending.com. Come experience the power of caring on your next FHA loan with Parkside Lending."