As an industry, we continue to be reminded of a small minority’s wrongdoings. The latest example comes from New York where a Copiague man was sentenced last Friday to 12 ½ years in federal prison for conning banks out of more than $30 million in a mortgage scam over a six-year span. Before everyone starts hoping for fewer rules and regulations, and looser loan guidelines, how can we convince politicians and regulators that things like this won't happen again?

Servicing News

Fitch reported that most U.S. mortgage servicer portfolios are seeing their non-agency exposure continue to decline, though Select Portfolio Servicing (SPS) is proving to be a notable anomaly, per Fitch's latest quarterly U.S. RMBS Servicer Handbook. ThomsonReuters noted, "The slow return of the new issue RMBS market continues, though not enough to offset declines in non-agency portfolios. SPS is an exception as one of the few non-agency servicers that has seen dramatic growth in its portfolio over the last year. SPS' total non-agency portfolio totaled 410,286 loans with a balance of $80.03 billion at fourth-quarter 2016 (4Q'16), a notable increase from 333,520 loans with a UPB of $71.5 billion at 4Q'15. 'SPS has grown largely through successful acquisitions of seasoned portfolios from large bank servicers, with much of the new product coming in the form of subprime loans,' said Managing Director Roelof Slump.

"Nationstar, normally the #2 servicer on this list behind Ocwen, fell to #3 with the rise of SPS with 403,609 non-agency loans ($78.2 billion) at 4Q'16. Ocwen remains the servicer with the most non-agency loans in its portfolio, totaling 1.01 million and $151.6 billion at the end of last year. 'Nationstar will be an area of focus as 2017 progresses as they are likely to inherit CitiMortgage's agency product as its gradual exit from servicing continues,' said Slump. 'Another servicer of note will be Cenlar, who stands to take over much of Citi's non-agency portfolio.'"

News broke yesterday that Ocwen Financial Corporation entered into a new consent order with the NY DFS that ends the requirement for a third-party monitor. The new order, however, still does not yet allow for MSR acquisitions until a scheduled servicing exam is completed. The previous NY DFS consent order was scheduled to end at the end of March though the regulator had discretion to extend it for another year. The announcement comes about one month after resolving similar matters in California.

Switching to agency servicing, servicers wonder when the increase in rates, which one would think should increase servicing values, will result in companies paying more for it. I've seen two Prestwick Mortgage Group offerings recently. The first was an MSR package of $335 million New England FNMA A/A. Go Pats? The 100% fixed rate, 100% retail originated pool has a WAC of 3.743%, an average unpaid balance of $199k, 755 WaFICO, 66% WaLTV, approximately 85.7% of the loans on properties in Massachusetts with the remaining 14.3% on properties in New Hampshire. The bid date for the portfolio is tomorrow, Wednesday, March 29, 2017, at 5:00 PM EDT.

The second was a $283 million FNMA/FHLMC + $120-180 million FNMA/FHLMC Annual Flow Agreement. The pool is $164k average unpaid principal balance, 4.009% WAC, 0.2504% weighted average net service fee, 100% conventional and fixed rate, 95% retail originations of the seller, approximately 36.7% of the loans are on properties in Florida; 28.1% on properties in Michigan; 21.4% in Indiana; 10.6% in Alabama; and the rest in 8 other states, 0.754% delinquency ratio, with a WaFICO of 750. The concurrent flow agreement will be based on production during 2016 and the projections of the seller. The mix of product should be consistent with: 75/85% FNMA 15-25%, 85-90% 30yr 10-12% 15yr < 3% ARM, $180-190k avg, 92-95% O/O, 85% SFR, 750 WaFICO, FL (40%) MI (25%) IN (21%) TX (10%).

MountainView Servicing Group, LLC had a $1 billion FHLMC/FNMA non-recourse servicing portfolio that is being made available to the national market. The package is: 100 percent of 1st lien product, 239K average loan size, WaFICO of 744, WaLTV of 74%, a WAC of 3.90%, with top states of California (21.5 percent), Florida (10.4 percent), Georgia (9.3 percent), and New York (8.6 percent). 

Capital Markets

Altavera Mortgage Services (outsourced residential mortgage origination services) has been approved by Standard & Poor's Global Ratings (S&P) as a third-party due diligence provider for U.S. residential mortgage-backed securities (RMBS) rated by that agency. Altavera provides investors and correspondent aggregators with a full range of closed-loan file review services for agency and non-QM residential mortgages, including validation of product acceptability to investor guidelines, credit decision and supporting documentation, QM/ATR requirements, regulatory compliance, property valuation and closing documentation.

Looking at bond prices and interest rates, of course stock and bond markets don't move in opposite directions. (Just look at the bond rally and stock rally we've seen for a decade or two.) But the same economic forces can move both markets, and lenders should keep in mind that Trump and Ryan aren't the only reasons why stocks have enjoyed a months-long advance. Starting in the 2nd half of 2016 nominal growth started improving markedly not only in the US but globally too with impressive numbers witnessed in such major economies as the European Union and China. This is good for stocks, bad for rates - but can it keep going?

In the near-term, hopes for tax changes (realistic or otherwise) and supportive nominal growth will continue to help stocks. But "the smartest guys in the room" are cautious over the long term: corporate earnings are doing well, the nominal growth backdrop is supportive, and there aren't any dramatic imbalances in the economy (although we should keep an eye on subprime auto loans, student loan defaults, farm values, and commercial real estate). The economy is near full-employment, and regardless of one's political leaning it is very difficult to "goose" a full-employment economy facing the twin structural headwinds of mediocre labor supply and productivity growth (which, let's face it, are the only two determinants of any economy's growth potential).

Rates did well again yesterday, if for no other reason than the failed health care changes could lead to problems for the Administration putting forth a tax plan, which in turn would be "un-inflationary." Said another way, the markets reacted to the inability of Republican leadership, including President Trump, to repeal and replace "ObamaCare," and what it might mean going forward in getting other items on Trump's agenda passed. Evans, the Chicago Fed President, said that without that fiscal stimulus assumption, policymakers would have been forced to see the late-2016 jump in interest rates as a contractionary development and he didn't think that conclusion was appropriate. For those who like numbers the 10-year note rallied almost .250 in price (closing with a yield of 2.38%) and the 5-year note and agency MBS prices improved slightly.

Today is a potpourri of economic events, probably none of which will move the markets much. At 8:30AM ET is Leading Economic Indicators, and at 9AM ET is the January S&P/Case-Shiller Home Price Indices. At 10am is March Consumer Confidence, and then later a $34 billion 5-year note auction along with several Fed officials speaking. In the very early going rates are nearly unchanged from Monday's close.

Jobs and Announcements

"What distinguishes a premier warehouse lender from the other choices available in this market?  BofI Federal Bank believes it comes down to diverse product offerings, including a broad array of non-agency/non-QM investors, exceptional service and basic economics. They provide facilities from $5MM to $100MM for small to large mortgage bankers with varying business models. BofI will fund non-QM loans to approved investors, loan amounts up to $5MM, and agency and government loans with no overlays.  Their extended funding times up to 5:30 pm ET and a comprehensive list of approved investors make BofI Federal Bank an essential partner to help grow your business." Contact Robert Martini or Robert Norine at 888-764-7080 to learn more about BofI's warehouse program and its features.

First Community Mortgage is pleased to announce that Joe Griffin has joined the company as Business Development Manager for Correspondent Lending. An industry veteran with 21 years of Correspondent, Wholesale and Warehouse lending experience, Joe will help develop and deepen business partner relationships in our growing Correspondent channel.  FCM recognizes that people are the key to successful partnerships and we are committed to offering unparalleled service and support to our business partners with our Human Mortgage approach. If you are interested in learning more about FCM's Correspondent Lending and our Human Mortgage, please contact Joe Griffin.

Santander Bank is in the midst of an ambitious growth plan and is currently hiring for experienced, top-performing Mortgage Loan Officers across its footprint (MA, RI, CT, NH, NY, NJ and PA). As a major mortgage lender, Santander leverages the benefits of local processing, underwriting and closing, and provides its Loan Officers with outstanding sales management support from a team of experienced, non-producing Sales Managers. Santander brings many benefits to the table for its Loan Officers including a superb product line-up (including an attractive jumbo balance sheet product), competitive rates, exclusive assigned retail branches and referral opportunities, a competitive commission plan and a great menu of employee benefits (including medical, dental, vision and 401K). If you are looking to build your list of contacts and grow your career as a Loan Officer with Santander, please contact Matthew Oliveira (401-435-1265).

PRMG is hiring motivated Correspondent AEs as management continues to expand in the TPO space! "Account Executives, there are no limits to the success you can achieve with PRMG. You will be the driving force behind our Corr-business. You will use your knowledge of the industry, communication skills and sales savvy to develop relationships with mortgage bankers, provide unparalleled service, and bring in their business. PRMG's current Correspondent Clients deliver loans on a Non-Delegated basis, with a Delegated offering coming soon. PRMG will provide you with the tools you need to succeed: competitive products and services, training, and allow you to build your own portfolio of clients. PRMG is a national leading lender, voted No. 1 of the 50 Best Companies to Work for in America 2015 and remains in the TOP 25 of 100 Mortgage Companies in America!  PRMG employees over 1,300 people with 93 branches across the country." Please Submit Resumes to Michelle Evans, Talent Coordinator.

Origination is heating up, so with the race to cut cycle times a streamlined borrower process is a must. Mortgage giants like Quicken Loans and Movement Mortgage are leveraging technology to boost their capacity. But even the smallest teams can compete using lightweight platforms from players like Maxwell. For example, Maxwell's FileFetch technology automates borrower document collection by linking to thousands of financial institutions to automatically pull in actual bank statements, W-2s, paystubs and full tax returns. Maxwell also keeps the borrower and real estate agent in tune with regular notifications. The Maxwell team tells me that loans facilitated with their technology close 22 days faster than the national average. You can sign up for a demo of Maxwell using the link.

Bank of England Mortgage has chosen ReverseVision's RV Exchange LOS to support the bank's new home-equity conversion mortgage (HECM) division. Bank of England (based in England, Arkansas) is a depository institution with branches in 39 states. It chose RVX primarily because of the LOS's smooth integration with other software used by the bank. ReverseVision technology supports more reverse mortgage transactions than all other systems combined.

Matic Insurance Services, Inc., a digital homeowner's insurance agency for mortgage borrowers, has partnered with Maxwell, a provider of digital mortgage software. Matic's network of nationally A+ rated insurance carriers enable borrowers to quickly find a customized homeowners insurance policy with just a few clicks on their desktop or mobile device. Under an agreement between both companies, Maxwell will integrate Matic's homeowner's insurance software into its platform, allowing borrowers to receive customized homeowner's policy options in seconds and helping Maxwell's clients close loans faster. Lending teams on Maxwell collaborate with homebuyers in a modern digital workspace, on any device, with connectivity to thousands of data sources. Leveraging connectivity, like Matic Insurance Services, Maxwell reports that loans on its platform close 22 days faster than the industry average.