“Writing about music is like dancing about architecture.” A clever quote about differences which reminded me that there are differences between the national debt and the budget deficit. Beginning in 2022, U.S. annual budget deficits are on track to top $1 trillion, but some economists say that isn’t really a problem as long as the economic growth rate exceeds the rate the US pays on debt, the debt can be managed. Rates may help. SF Federal Reserve President Mary Daly says there is a possibility that no interest-rate rises will be imposed in 2019, as long as the economy progresses as expected, and Fed chairman Jerome Powell has said that "the case for raising rates has weakened somewhat."
Lender Products and Services
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.
Doing business with Caliber Correspondent just got easier than ever! Introducing Encompass Investor Connect™ Caliber Home Loans, Inc. is pleased to announce our latest file delivery enhancement, in partnership with Ellie Mae, Encompass Investor Connect. Caliber is the first non-bank mortgage lender to fully launch this integration with Ellie Mae. Encompass Investor Connect will increase your delivery efficiencies by eliminating the need for uploading a closed loan package via our Correspondent Lending Portal (“CLP”). Encompass Investor Connect provides an all-in-one solution by establishing a secure system-to-system workflow with Caliber Correspondent. Encompass Investor Connect will also ensure the delivery of accurate and compliant loan data and documents. You must be a mutual customer of Ellie Mae Encompass and Caliber in order to take advantage of this enhancement. For more information about Encompass Investor Connect, contact your Caliber Sales Representative.
Boost your organization’s mobile lending power and brand reach with fully white-labeled mobile apps from Floify! Mortgage companies who use Floify’s mortgage automation platform to streamline their loan origination processes now have the ability to white-label the system’s native iOS and Android mobile apps – all without needing to recruit their IT or support teams. This powerful new option to fully sync unique brand styles with Floify’s mobile apps adds a next-level digital offering for lenders who also leverage the system’s highly customizable point-of-sale to create a seamless, efficient and on-brand experience for their borrowers. To see how Floify’s white-labeled mobile apps can help expand your brand and make your lending operation more mobile, request a live demo.
VA & FHA applications account for roughly 20% of new business, and the preponderance of funded FHA & VA loans go into Ginnie Mae securities, actively traded in the secondary markets. (Early estimates from IMF peg FHA originations at $202 billion for all of last year while VA reported $165 billion in new loans guaranteed – about 23% of the est. $1.6 trillion total volume in 2018.) These loans, usually very profitable of independent mortgage banks, have been put on the back burner by big banks in terms of market share, much to the delight of the independents. Though unlikely, that could change with a moment’s notice. Until then, regulators will continue to warn us about capital concerns with Ginnie issuers.
Ginnie Mae announced that issuance of its mortgage-backed securities (MBS) totaled $30.3 billion in December: $28.2 billion of Ginnie Mae II MBS and $2.1 billion of Ginnie Mae I MBS, which includes $2 billion of loans for multifamily housing. Ginnie Mae's total outstanding principal balance of $2.042 trillion is an increase from $1.913 trillion in December 2017. And in January issuance of its MBS totaled $29.9 billion: $28.7 billion of Ginnie Mae II MBS and $1.3 billion of Ginnie Mae I MBS, which includes $1.1 billion of loans for multifamily housing.
The "Ginnie Mae December 2018 UPB Report" has been posted, and it added a new bulletin regarding "Implementation Date for HMBS Platinum Disclosures."
Late last week the Department of Veterans Affairs (VA) issued a circular clarifying its new policies regarding VA-guaranteed cash-out refinancing loans. The policies took effect on February 15, 2019, pursuant to an interim final rule which was published in the Federal Register on December 17, 2018. Circular 26-19-5 is a clarification of the new requirements for cash-out refinances, effective with loan applications taken Friday. The industry had false hopes that the VA would delay the implementation of the new policy, since many LOS vendors are not ready. Thanks to the Ohio MBA who issued a sample disclosure.
FHA published Mortgagee Letter (ML) 2019-01: Third Party Verification Services, which provides guidance for the use of Third Party Verification (TPV) services as an alternative for verifying borrowers’ employment, income, or assets. This ML revises documentation requirements to allow the use of vendors to verify information directly with borrowers’ employers or financial institutions without the need for additional documentation and is consistent with industry practice. The mortgagee remains responsible for the quality of its FHA-insured mortgages and must ensure that its TPV vendors fully comply with all applicable laws and FHA requirements.
Recall that the VA will no longer guaranty refinancing loans when the LTV exceeds 100% (including VA funding fee). If the Veteran chooses to close a loan in which the loan amount exceeds 100% of the reasonable value of the property, the Veteran must pay the amount which exceeds 100% of the property value at closing.
And remember that last May the “Protecting Veterans from Predatory Lending Act” (“VA Act”) was signed into law. The VA Act supersedes certain elements of the Interim Final Rule (“IFR”) published by VA in the May 9, 2014. In October the VA published 83 FR 50506 that states VA will not finalize the IFR because the IFR does not address the requirement of the VA Act. Instead, VA will restart the rulemaking process, that when final, will supersede the IFR by revising the VA’s qualified mortgage criteria. However, the document also stated that the IFR remains in effect until such future rule is effective and that to the extent the IFR conflicts with or is superseded by the VA Act, the VA Act controls.
Capital Markets
Wednesday was a snoozer of a day in the bond market, with U.S. Treasuries ending the day on a mostly flat note after the release of the January FOMC Minutes that were mostly in line with dovish market expectations. The FOMC Minutes acknowledged that labor market conditions continued to strengthen while GDP growth remained solid in the Q4, but FOMC members expressed concern about the volatility seen in financial markets at the end of 2018. The Minutes echoed Chairman Powell's view that patience with regard to future changes to the fed funds rate range would "allow time for a clearer picture of the international trade policy situation and the state of the global economy to emerge." The FOMC discussed options for "substantially slowing the decline in reserves by ending the reduction in asset holdings at some point over the latter half of this year" with "almost all" participants agreeing it would be desirable to announce a plan to stop reducing the Fed's asset holdings later this year.
Internationally, European Central Bank chief economist Peter Praet said the governing council will discuss new targeted long-term refinancing operations during the next policy meeting, but a final decision may be made at a later time, and British Prime Minister Theresa May met with European Commission President Jean-Claude Juncker reportedly seeking a legally-binding concession on the Irish backstop.
Today has lots of news and no Fed speakers, tomorrow the opposite. We’ve had Durable Goods for December (+1.2%, ex-transportation +.1%), initial jobless claims (216k), and Philly Fed Manufacturing Index for February (-4.1, lowest in nearly three years). Ahead are the preliminary Markit manufacturing and services PMIs for February, and January’s Existing Home Sales, and Leading Economic Indicators. We begin today with Agency MBS down/worse a few ticks and the 10-year yielding 2.67%.
Employment
California’s Redwood Mortgage, a privately-owned real estate mortgage and investment company, seeks an Account Executive for the Orange County/San Diego area. “Redwood Mortgage has been one of California’s leading innovators in private mortgage lending and mortgage pools. The company offers the right candidate the opportunity to build a territory and career in our loan sales department. The ideal candidate has solid experience in commercial, multi-family and residential investment real estate lending, have an active Cal DRE real estate license, and NMLS. The person will learn and understand the commercial bridge loan product and private money loan product, and manage a territory and develop relationships with Bankers, Brokers and Retail borrowers. Benefits include 401K, dental, life insurance, medical, and vision.” Interested parties should contact the Director of Sales and Marketing Steve Belleville.
BankSouth Mortgage is seeking to hire an experienced Producing Production Branch Manager for its Duluth, Georgia office. “With competitive rates, cutting-edge technology focused on serving the ‘on the go’ agent and client and a variety of financing options, BankSouth Mortgage is an excellent home to grow your personal loan production! Interested candidates should visit www.banksouthmortgage.com/careers or contact joinus@banksouth.com!”
“If you’re a forward thinking individual with experience in Operations, MiMutual Mortgage Wholesale invites you to explore the opportunities currently available on our operations team. A well-capitalized, privately held Mortgage Bank in 37 states, MiMutual Mortgage Wholesale expects to continue the same growth trajectory in 2019 that it experienced in 2018 and great candidates are sought to help with this growth. Customer Service and problem-solving mindsets are a must. In addition to opportunities on our operations team, Wholesale Account Executives are welcome to speak with Andrew Ryan (949-735-1180) for a confidential evaluation of Broker overlap and opportunities in the western part of the United States.
The Money Store looks to expand and grow by hiring professionals who are leaders in their field, who want to find creative solutions and are determined to make a difference. As the company continues to successfully grow, The Money Store recently hired Mack McConkey as Division Manager for the Western States. McConkey’s track record of expediting significant growth with leading lenders over the past 25 years will help drive The Money Store’s continued growth. McConkey comments, “As the market has evolved, having an agile organization which can deliver highly competitive rates & programs to customers, with a system that delivers top speed & efficiency, while compensating Mortgage Professionals fairly—is a superior value proposition that achieves a new industry standard. Ultimately, this is what helps the company thrive in the communities we serve.” The Money Store is a direct mortgage lender located in Florham Park, NJ.
The National Mortgage News named Mortgage Unlimited as one of 2019’s Best Mortgage Companies to work for and it's also one of the fastest growing. “’We are proud to bring change to our industry through our Sustainable Lending Platform,’ said Justin Tagliareni, CEO at Mortgage Unlimited. Mortgage Unlimited exists to pioneer a new vision in our industry based on Love, Education, and Prosperity through Sustainable Lending. Mortgage Unlimited, L.L.C. is a family owned mortgage lender in existence for over 30 years and headquartered out of Garfield, NJ. Our company proudly recognizes our moral and ethical responsibility to protect the financial well-being of the families and communities we serve. We then reinvest a portion of our profits back into the local communities through charities and non-profit organizations. Be a part of the change in our industry! Email Justin Tagliareni to learn more.”
After a record-setting 2018, the leader in non-QM Angel Oak Mortgage Solutions continues to add to its impressive roster of Account Executives. Debra Steere came on-board to cover Contra Costa County in Northern California, Kristine Estill will be covering Northern Washington and Chuck Junkmann is in Palm Beach County, Florida. These new AEs will be in their communities, teaching brokers and correspondents about growing their business with non-QM. And AOMS is still looking for more Account Executives in markets across the country. To learn more, view the latest job openings on the Careers Page or email Regional Sales Manager, John Wise.
MSA Mortgage, LLC, announced that 25-year industry vet Martin Moran III, J.D., has joined the MSA Team as Chief Business Development Officer, SVP.
M&A
US Bank is picking up the TIAA retail platform. Jungle drums say that TIAA is already cutting folks. Yes, another big retail deal, expected to close next month, where US Bank is picking up the retail operation (which TIAA was exiting) and retain 275 FTEs in a TIAA realignment. US Bank is assuming the leases of 25 sales offices and a couple ops centers while TIAA will concentrate on originating home mortgage loans through existing digital mortgage capabilities.
Plenty of other deals have been announced in recent weeks on purely the depository bank side of things. The median time taken by the Federal Reserve to rule on a proposed bank merger fell to 3.8 months in the first half of 2018 compared with 7 months in 2015, according to Fed data, with rulings from the Office of the Comptroller of the Currency also taking less time. Changes in Trump administration policy are cited as the reason for the acceleration.
In Wisconsin Citizens Community Federal ($975mm) will acquire Farmers & Merchants Bank ($195mm) for $21.6mm in cash (85%) and stock (15%) or 1.06 tangible book. In Oregon Lewis & Clark Bank ($199mm) will acquire Clatsop Community Bank ($102mm) for about $15mm in cash and stock or about 1.29x tangible book. Georgia’s United Community Bank ($12.5B) will acquire First Madison Bank & Trust ($258mm) for about $52mm in cash (100%). And don’t forget that SunTrust Bank ($216B, GA) will merge into BB&T ($226B, NC) for about $66B in stock (100%). BB&T shareholders will own 57% and SunTrust shareholders will own 43% of the to-be-formed 8th largest US bank.
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