“Well, shakin' my moneymaker ain't ever made me a dime! And there ain't no sugar for you in this shaker of mine!” So sing Maddie and Tae. Conversely, homebuilders are pretty good at making plenty of dimes (if they can find land and labor), but they aren’t immune to mounting compliance costs due to the regulatory regime. Of course these rising compliance costs are passed on to consumers. Regulatory fees have increased by nearly 30% since 2011. "It really makes it hard to satisfy the lower end of the market, which is a lot of first-time buyers," said Paul Emrath, vice president for survey and housing policy research at the NAHB, who conducted the survey of about 400 builders across the country.

News continues to hit about Lending Club. Its stock was down 26% yesterday. And CNBC reports Citigroup will soon begin to lay off employees as it seeks to boost performance and continue to streamline. The Lending Club news made me want to look at bank & non-bank stock prices - how are they doing? Not good. In fact, analysts are hard-pressed to find a single publicly held non-bank residential lender that made money in the first quarter of 2016, or that has seen its stock price improve this year. Put another way, practically every lender not part of a bank has not only lost money so far this year, but has seen its stock price worsen & in some cases plummet. And most of them have not had a profitable year in a few years! Let's hope that employees don't have their entire 401(K) held captive in company stock, and that the lessons learned eight years ago aren't forgotten.

Want some examples of stock prices in the last six months? Nationstar (-14%), Ocwen (-69%), PMAC (PFSI -19%), Impac (-25%), Walter/Ditech (-58%), PHH (-15%), Stonegate (-30%). Redwood Trust, after being down 30% at one point, has rebounded to actually be up 1% in the last six months. How about the banks, with their lower cost of funds, other product lines, and core bank earnings? Not much, if at all, better: Bank of America (-21%), Wells Fargo (-12%), Citi (-20%), Chase (-9%), US Bank (-4%).

What is the culprit? Were all of these stocks overvalued six months ago? Their earnings have shown mixed numbers. There are plenty of lesser reasons, but the primary reasons seem to be servicing, or related to it. Whether it was hedged or not, plenty of management teams thought servicing would be on their books much longer. When those loans pay off, and after the early pay-off penalty expires for whoever originated the loan, it is a hit to the asset side of the company's balance sheet. And any company that paid above-market premiums for servicing, well, they took a bigger hit. Industry experts are watching the impact of Basel III on banks' servicing portfolios - is there a natural buyer for those portfolios? Or will the run-off equal the new production coming in?

These results, of course, have plenty of employees of non-publicly traded firms asking senior management about how their company is faring. Certainly smaller lenders who were able to take advantage of larger investors paying up for servicing benefited by selling the product servicing released. And certainly there is concern among any profitable lenders owned by venture capital firms who are arguably quicker to pull the trigger on unprofitable ventures.

Regarding the stock performance of banks & non-bank lenders, industry expert Joe Garrett (of Garrett McAuley) writes, "The short-term fluctuations of a stock or an entire sector can be difficult to understand, and even when there's a consensus as to why a big move occurred, it's often proven wrong six months or more later. Over the longer term, investors have simply not done well investing in mortgage banking companies. Look at the leaders of 1998. Almost all gone. Look at the leaders of 2007. Almost all gone. And for the vast majority, it's not because they sold to a bigger company at some terrific premium. In most cases, the public mortgage companies don't last because they blow up.

"The window opens for mortgage company IPOs every so often, but you'd be hard pressed to find a public mortgage company that's been around for more than 15-20 years. For a variety of reasons, most of them simply blow up. Do you remember BNC, New Century, Novastar, Accredited, Aegis, EMC, Fieldstone, Ameriquest or even Indy Mac? Lots of money was lost on these mortgage lenders that were once the darlings of Wall Street. Let's put it this way. Investing in mortgage company stocks has generally been a money-losing proposition. Investors may occasionally forget the lessons of the past and become excited about some new mortgage company with some new story as to why they're different. But as the French say it so well, La plus ca change, la plus c'est la meme chose. The more things change, the more they stay the same. As for why mortgage stocks & big banks did so poorly the first quarter, let's wait six months and then try to figure out what happened."

Renovation & jumbo program news?

Pacific Union Financial's recent bulletin includes information regarding Ineligible Program Options which have been updated to indicate that Freddie Mac Renovation Mortgages are not permitted. Also, Loan apps dated on or after April 18^th will require alignment with recently announced Fannie Mae changes. Some of the requirements include a financed property has been redefined to include only 1-4 unit financed residential properties where the borrower is personally obligated on the mortgage(s). Eligibility restrictions for LTV/(H)CLTV and cash-out refinances have been removed and are aligned with standard eligibility requirements. In addition, its recent bulletin states Pacific Union will now qualify California borrowers and determine escrow impounds and monthly collections using a 1.25% rate or actual rate in the property tax calculation.  Review the Purchase Review section of the Correspondent Lending Guide for complete details.

Franklin American Mortgage has expanded the maximum LTV/CLTV/HCLTV limits for High Balance products. These changes are effective with locks on and after May 13. Visit FAMC website for details as well as other updates.

Plaza's Elite Jumbo Fixed and ARM Program Guidelines have been updated to clarify that when a Balance Sheet or Profit and Loss Statement are required, they must be signed and dated on or before the Note date. In addition, HomeStyle Program Guidelines have been updated to identify specific improvements that are ineligible. The customer service contact information has also been updated with a new email address.

Jumbo Core Fixed and Hybrid Products have been added to NewLeaf Wholesale's product line. Some general guidelines include: These Jumbo products are QM and must meet the ATR requirements. The maximum LTV is 80% to $2,000,000 and maximum loan amount is $2,500,000. Investment Properties are not allowed. Purchase, Rate/Term and Cash-out are available.

Citi has modified its LP-Agency Jumbo overlay to maximum LTV/CLTV/HCLTV of 75% for 3-4 unit primary purchase or rate/term refinance and 1-unit investment rate/term refinance. In addition, an overlay has been added to Home Ready & Home Possible. <= 95% LTV - Minimum FICO=620; maximum DTI=43%. For complete product/program guidelines, please refer to the Citi Correspondent Manual.

Mortgage Solutions Financial has reinstated its 701 Non-Conforming products. Guidelines for these products can be found here.

Amidst all of this rates continue to be good - in fact mortgage rates are about as good as they've been in quite some time. As volatility has diminished hedge costs have come down, allowing lenders to price a little more aggressively. Yesterday U.S. Treasuries gained ground along with international sovereign debt as oil and metals prices fell sharply. There were no U.S. economic data releases.

And there isn't much market-moving news today either. We have the March JOLTS - Job Openings numbers at 10AM EDT, along with March Wholesale Inventories, and then a $24 billion 3-year T-note auction. We closed the 10-year Monday at a yield of 1.76% and this morning it is hovering around 1.76% with agency MBS prices unchanged from Monday's close.

Jobs and Announcements

For companies looking for wholesale talent, a seasoned group of Wholesale Mortgage veterans with operations in Southern California and AEs throughout the West is looking to join an established wholesale mortgage banker. The group's footprint covers the Western states as well as Texas and Colorado. Members of the group include Account Executives, regional managers, underwriters, account managers and could include funders and set-up. The mortgage banker should be financially stable, customer servicedriven, and want to expand its presence in the Western US. If you are a mortgage banker who shares a commitment to providing exceptional client service and increase your monthly fundings by $75-100M, contact the Wholesale Group at Team@wholesalemortgageteam.com

On the retail side American Financial Network (AFN) is once again expanding its geographic footprint and is searching for very select, top-tier mortgage professionals capable of rapidly progressing into a multi-branch Regional Management role. Licensed across the country, branch opportunities are available in WA, AZ, CO, VA, NJ and PA. The ideal candidate is currently a mortgage broker or an existing retail branch manager, with monthly production of $3-5+M, and possesses strong recruiting and leadership skills. "As a direct seller to FNMA, FHLMC and GNMA, we offer a comprehensive suite of agency products with virtually no overlays along with non-QM products through our delegated partners. To support your production, our divisional fulfillment center offers dedicated teams (processing thru funding) of experienced professionals that only work for you! To maximize your earnings, managers have direct input into operating margins and MLO compensation. Qualified candidates in search of benefiting from superior pricing, 100% branch credits and multi-branch overrides are encouraged to submit a letter of interest and/or resume to Gary Fioretti." 

In ops job news, Sierra Pacific Mortgage is hiring! To keep up with its rapid expansion, the company is looking for highly talented people to fill operations positions throughout its California Regional Operations Centers."If you are an ultimate underwriter, passionate processor, dazzling doc drawer or fabulous funder who's looking to make a move to a company known for its strength, stability, and dedication to both its clients and employees, Sierra Pacific Mortgage may just be the company for you! Take the next step in your career and email retaillending@spmc.com with your resume!

In personnel news "Academy Mortgage has added an A+ member to its Executive Team. The Salt Lake City-based independent mortgage lender has hired Aaron Nemec as EVP of Production and he will be responsible for the management and growth of production throughout the organization. Nemec is well qualified for the position, having spent the past two years managing all of the retail mortgage banking production activities for Guild Mortgage as EVP and National Retail Manager. Prior to this, he served as a Vice President and Regional Manager, and a Vice President and Area Sales Manager for Countrywide Home Loans. Contact Aaron Nemec or National Recruiting Manager John Owens to join Academy, one of the top independent purchase lenders in the country as ranked in the 2015 CoreLogic Marketrac Report."

Sindeo announced its newest executive hire, Deepak Kumar, who will assume the role of COO/CFO. Kumar is an accomplished business executive with over 20 years of experience leading teams to high-growth business success, most recently as Fannie Mae's Senior Executive and VP, Client Management.

"Live from National Mortgage Professional Magazine's Mortgage News Network Studios ... it's Inside the Renovation Studio. Staring Damon Richardson, Renovation Lending Specialist. Also staring Pam Seifert, Managing Director of Training Wholesale and Carl Markman, Director of National Sales for REMN Wholesale. Join Mortgage News Network for the first-time ever, FREE live broadcast from the MNN studios on Thursday, May 12 at 2:00 PM EDT. In this 60 minutes show, the cast will show you how to sell renovation loans, help you define your audience, and target them through renovation loans. They'll also show you how to generate more referrals. And featuring ... Selling reno loans to millennials! You must preregister for this FREE live broadcast here.