I know plenty of folks in Nebraska. And people who went to school there but left soon afterward. But I don’t know Elsie Eiler, who is the only resident of the entire town of Monowi, Nebraska. So, if you want to move some place and double its population, here’s your chance.

Walter Investment Corp.

In case you didn’t know, there aren’t many “pure” mortgage companies that are publicly traded, and you can watch the stock price. Walter Investment Corp. is a is a non-bank residential mortgage servicer who has seen its stock price plummet from $40 per share to 60 cents per share. In fact, it is going through a Chapter 11 reorganization plan. It is the parent of Ditech Financial and its reverse lending affiliate, Reverse Mortgage Solutions. The company has a broad array of servicing capabilities and their clients include national and regional banks, government organizations, securitization trusts, private investment funds and other owners of mortgage assets. In 2015 Walter lost $263 million, in 2016 it lost $529 million, and through the first three quarters of 2017, Walter posted a total net loss of $214 million.

Fannie Mae is its largest client, but Walter has 2-3 main competitors in the special servicing market. It could be subject to additional competition from banks, private equity firms, and smaller special servicers. The company's primary customers are "credit-sensitive" borrowers that tend to have higher delinquency levels. If the economy were to go into a downturn, these borrowers could have higher default rates, which would cause higher advances and interest expense for the company. And like every other lender, Walter is subject to mortgage servicing rules from the CFPB and several other regulatory agencies. The company could be subject to fines and litigation from these regulators. Also, one of the largest revenue drivers, lender-placed insurance commissions has been under tremendous scrutiny from the GSEs, NY State attorney general, CFPB and other federal and state regulators.

I mention this to set the stage for the news that Walter’s CEO Anthony N. Renzi, age 53, who joined the Company and began serving as the Chief Executive Officer and President on September 12, 2016, is leaving. Renzi will stay on as CEO and president while the company searches for a replacement – for the fifth time since October 2015. He follows Mark O’Brien, Denmar Dixon, and George Awad.

And don’t be too attached to the name Walter Investment. In a filing with the Securities and Exchange Commission, Walter said that upon exiting from bankruptcy, it will be changing its name to Ditech Holding Corporation.

Bank News

Wells Fargo has had better weeks, followed by being downgraded by several analysts over the weekend. Sure, it was a good thing that Michael DeVito was named to head up mortgage. But the industry learned that Quicken originated more volume in the 4th quarter. And then the Fed, in an “unprecedented action,” halted any plans that Wells Fargo might have had for asset growth this yearuntil it “fixes its problems.” Remember that banks take in deposits on which they are obligated to pay interest (liabilities) and make loans on which they receive interest (assets). Besides loans, securities portfolios comprise the assets of banks. And mortgage servicing rights are indeed assets as well as a source of revenue – something Wells’ correspondent group knows a lot about.

At the other end of the spectrum, recently JPMorgan Chase said it will hire 4,000 employees, open 400 more branches over the next 5 years, boost its small business lending by 20% over 3 years, grow its mortgage lending with 250,000 more loans to lower-income consumers, and increase pay for some employees with its approximate $3.6 billion net income tax windfall in 2018.

S&P Global Market Intelligence reports branch closures sped up in 2017 with 2,151 net closings. This marks 8 consecutive years of declines and at the end of 2017 there were 88,812 total branches. The “big banks” are not out acquiring other banks. Looking at smaller banks, so far this year we’ve seen 14 acquisitions. Investment bankers say they are seeing substantially higher takeout prices and believe that banks should benefit from top-line growth if the tax package spurs economic activity, bottom-line growth as banks were generally full taxpayers, and possibly a steepening of the yield curve. And many believe that the prospects are good for the passage of a targeted regulatory relief bill in this Congress which will be bullish for bank M&A. Notable provisions of S.2155 include a ratcheting upward of the $50B bank asset threshold to $100B immediately and to $250B within 18 months following the effective date (likely before 3Q18).

It has been quiet in recent weeks in terms of mergers and acquisitions. The Park National Bank ($7.8B, OH) will acquire the 91.45% of NewDominion Bank ($322mm, NC) that it does not already own for about $76.4mm in cash (40%) and stock (60%) or about 2.01x tangible book.

Capital Markets

Yup, rates have moved higher. The U.S. economy is doing well, and, in addition, supply and demand shifts are moving rates as well. Investors are concerned about increased bond market supply (higher supply = lower bond prices = higher rates) due to fiscal spending initiatives. Spending typically stimulates the economy, and investors are concerned about rising growth and inflation, either of which are bad for rates. Investors are worried about the first group of investors and thus are making trades to try to get ahead of them, pushing rates higher.

Global monetary policy seems like it may be on the verge of a unified tightening, much like there was unified loosening in 2008-2015. A removal of policy accommodation means big central banks are buying fewer bonds. Lower demand for bonds = lower prices = higher rates. Finally, some traders are simply reacting to the momentum, selling bonds when rates rise above a certain threshold intraday (again, selling = higher rates), thus creating a snowball effect that pushes rates higher. Most rate sheets have 30-year fixed rates in the mid or high 4% level versus the 6% range we experienced in 2007 before the recession.

Looking back to Friday’s employment data, it once again showed strong job growth with 200,000 jobs added in January and the unemployment rate remained unchanged at 4.1 percent.  Although already lower than the level considered by many to be full employment, many expect the unemployment rate to decline further before bottoming out below 4 percent. Monthly employment has increased each month since October 2010 for a cumulative 17 million jobs added and the data continues to expectations that the Fed will increase rates in March. Another area of interest for policy makers has been wage inflation and Friday’s report showed that hourly earnings have increased 2.9% year-over-year which is the largest growth rate since 2009.

The 10-year Treasury note yield rose again to finish the week at 2.84 percent. Normally a down day in the equities markets would have trigger some buying in bonds, but both markets saw red on Friday.

In déjà vu, this Thursday is the deadline for lawmakers to reach a funding deal or face another shutdown. The calendar this week is not as busy as last week and kicks off with the PMI services Index and ISM Non-Manufacturing Index today. Additionally, today, the Fed will purchase $840 million in Ginnie Mae 3.0%, 3.5%, and 4.0% coupons. Tuesday sees International Trade data as well as Rebook Same-Store sales and job openings. Wednesday brings MBA mortgage applications, petroleum status report, a 10-yr note auction and Consumer Credit. Thursday has chain store sales and jobless claims and Friday finishes up the week with wholesale trade inventories. We begin the week with the 10-year yielding 2.84% and agency 30-year MBS prices are little changed from Friday’s close.

Employment, Promotions, Retirements, Comp Software

PrimeLending’s newest branch in Gilbert, Arizona is giving the area’s nickname — Valley of the Sun — a new meaning. That’s because Branch Manager Andrew Augustyniak and his team are blazing a trail of success with their scorching start. Andrew saw his opportunity in this thriving Phoenix suburb, the most populous incorporated town in the U.S., and he knew PrimeLending had the winning formula to take his team’s success to the next level, which is exactly what’s happening. This team of 7 mortgage professionals is already operating at full speed, thanks to PrimeLending’s seamless onboarding process and award-winning training program. Are you ready to put your career on the fast track? If you’re a top LO waiting for the opportunity to discover your best, your time has arrived. Contact Dudley Strawn at (469) 737-5743 to start down a new path.

MGIC is seeking an ambitious sales professional to be a part of our dynamic Sales team in the Northern Ohio Market. As an Account Manager, you will develop and maintain strong, long-lasting client relationships as well as growing the business by identifying new sales opportunities. The ideal candidate must have a college degree, strong presentation and communication skills, and the ability to travel with occasional overnight.  This person will report directly to Mike Kull, VP Managing Director. If you are a self-motivated, and experienced sales professional with an entrepreneurial spirit, then MGIC may be the right fit for you! Please send your resume Nancy Vang-Lee, Senior Talent Acquisition Partner.

Managing compensation for 200+ loan originators can be quite challenging…but it doesn’t have to be. After transitioning from “the spreadsheet method” to an automated system that still required manual intervention, Nations Lending Corporation was interested, yet skeptical, when it first learned about LBA Ware’s CompenSafe automated mortgage compensation calculation platform. “I did not want to think about starting another implementation, so I was reluctant to go down that road again,” Lakiesha McDaniel, HRIS Manager for Nations Lending Corporation, said. “Then we had the demo on CompenSafe, and I thought, ‘This is amazing. It would really solve all our commission issues.’” After a quick two-month implementation (compared to six with its previous solution), Nations Lending Corporation saw an immediate impact on the productivity of its payroll staff and much more. To see just how much CompenSafe improved Nations Lending Corporation’s incentive compensation plan management process, read the free case study here.

Congratulations to Dorinda Smith, the top executive with SunTrust Mortgage, who is retiring. She will step down as executive vice president and head of mortgage on March 31, and SunTrust newcomer Todd Chamberlain will take her place.

And congrats to Tom Borrelli. He has joined Northpointe Bank as Vice President of National Sales responsible for developing and leading retail mortgage originations and will focus on growing market share in existing regions while seeking new branch opportunities for Northpointe’s mortgage products.