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The government and lending

UDAAP, with its treble damages, is a bear. The FDIC announced a settlement with the Bank of Lake Mills, Freedom Stores, Inc., and Military Credit Services, LLC, for Unfair and Deceptive Practices, and it requires restitution to harmed consumers including military service members and their families. "The Federal Deposit Insurance Corporation (FDIC) announced settlements with Bank of Lake Mills, Lake Mills, Wisconsin, and two of its institution-affiliated parties, Freedom Stores, Inc. and Military Credit Services, LLC (MCS), for unfair and deceptive practices, in violation of Section 5 of the Federal Trade Commission (FTC) Act.

"As part of the settlement, the bank, Freedom Stores, and MCS stipulated to the issuance of respective Orders for Restitution and Orders to Pay Civil Money Penalties (collectively, FDIC Orders). The FDIC Orders require restitution of approximately $3 million to harmed consumers, and assess civil money penalties of $151,000 against Bank of Lake Mills, $54,000 against Freedom Stores, and $37,000 against MCS. The Orders require a restitution plan that covers all past and present borrowers who, from 2013 to 2015, received loans originated by the bank through Freedom Stores and MCS, and were harmed by the practices identified as being unfair or deceptive."

What were the companies accused of doing? Charging interest to consumers who paid off their loans within six months when the loans were promoted as six-month interest free. Selling add-on products in conjunction with loans originated by the bank without clearly disclosing the terms of those products. And failing to provide consumers the opportunity to exercise the monthly premium payment option in conjunction with the purchase of optional debt cancellation coverage on loans originated by the bank through the Freedom Stores and MCS channels.

Did you know that 24 million people work for the government in one form or another? And if it cuts back government payrolls (as some politicians have suggested) will those people be soaked up in the private sector? Billionaire ex-CEO of Microsoft and current owner of the LA Clippers, Steve Ballmer, revealed a database aimed to report, record and track government spending. In fact, it's more than just spending, it also factors in deductions or lack of revenue. The project involves "a small army of economists, professors and other professionals have been assembling as part of a stealth start-up over the last three years called USAFacts. The database is perhaps the first nonpartisan effort to create a fully integrated look at revenue and spending across federal, state and local governments."

Remember TARP? The U.S. Treasury Department has announced plans to sell $57 million worth of bank stocks, which were bought through the Troubled Asset Relief Program. According to the department's figures, $275.8 billion of bailout funding has now been recovered, with around $66.2 million still outstanding.

Housing's share of GDP came in 15.6% in the fourth quarter. Historically, that number has been around 18%. Housing continues to punch below its weight, as evidenced by tight inventory. It is hard to know exactly why homebuilding continues to be weak - credit is an issue, as is the general post-bubble caution, along with local land use regulations. 

Trainings and Events

Today I am attending the WMLA conference in Cody, WY.

California's MWF is hosting a CalHFA seminar May 17th at 8:30am-12:30pm in Long Beach in conjunction with Genworth Financial. If you would like to attend, please email Lisa Holland for details. This is just one of our many homebuyer assistance products, and the session includes training on all CalHFA programs, borrower and property eligibility, processing, documentation, and income calculations.

Data privacy and security risks are increasing for every company. Gain a better understanding of privacy compliance, risks, and the steps needed to protect your business. Join Lorman Education Services on May 17th for a live webinar to learn what every Attorney, Privacy and Compliance Officer should know.

Learn about Plaza's renovation product offerings -- the Fannie Mae HomeStyle Renovation loan. The HomeStyle renovation loan is a single-close loan that enables borrowers to purchase a home that needs repairs, or refinance the mortgage on their existing home and include the necessary funds for renovation in the loan balance. This webinar is scheduled for May 17th, register now.

Are you registered for the Great Northwest Mortgage Expo on June 13th? Be part of the area's exciting conference and trade show for LO pros bringing together hundreds of mortgage brokers, loan originators and bank and credit union lending officers from throughout the northwest for an event full of education, networking and fun.

Capital markets

If you think rates have been steady, you're right, and at least one quantitative measure bears that out. The Merrill Lynch Option Volatility Estimate, based on over-the-counter options on Treasury's maturing in two to 30 years, has fallen to its lowest level since August 2014 to settle at "55.2203."

Private label, jumbo market? Reuters' Dan Freed reports that Wells Fargo is hoping this year to sell bonds backed by mortgages without government guarantees for the first time since the 2008 financial crisis. Franklin Codel, who runs Wells Fargo's consumer lending division, stated, "This year one of our aspirations is to come back to the market with a couple of deals and we're looking at making sure we can structure those properly ... to try to test the market and see what we can do there to help bring confidence back."

"Never bet against the Fed" which released a new purchase schedule and its 30-year conventional purchases are shifting up in coupon to 4.0s at the expense of 3.5s. Based on recent statements it seems that the Fed remains on track to raise interest rates twice more this year (the odds of a June bump is over 75%) and potentially begin tapering their MBS purchases. This week a WSJ article asked, "What Happens When Central Banks Stop Buying Bonds?" It mentions that Central Banks have been the world's largest bond buyers with the European Central Bank holding $4.5 trillion in assets and the Fed holding roughly $4.4 trillion as part of their quantitative easing (QE) programs.

Some expect bond yields to rise when the Fed begins to slow or unwind their position like what happened during the 2013 taper tantrum. Don't forget the "flow" effect of QE which is the impact that daily purchases by central banks have on the markets. Bonds typically are stockpiled by banks who may be more willing to offer investors better prices if they know they can sell large amounts to an end investor (for MBS this would be the Fed). If this goes away, then are other investors (money managers, REITs, banks) positioned to take up the slack?

In terms of the actual bond market, yesterday Treasuries, and agency MBS prices, began the day slightly higher and ended the day that way despite strong inflation and jobs numbers. The new 10-year note improved nearly .125 in price to yield 2.40%.

This morning we already had more inflation news with the Consumer Price Index: +.2%, core +.1%. Retail Sales also came out for April at +.4%, ex-auto +.3%. Later are minor releases that cover business inventories and consumer sentiment. In the early going rates are lower versus last night with the 10-year at 2.36% and agency MBS prices better .125-.250.

Jobs and Announcements

"A Top-10 Retail Lender with a deep-pockets parent is looking to purchase/merge originating lenders with production of $500 million-$6 billion annually. We offer extremely competitive compensation, pricing and sales support structure. The key areas where we would like to add new teams as part of our family are; NC, SC, VA, IL, MI, MW, TX, OK, Northeast, OH, AL, LA and MS. We are not opposed to other areas of the country as well, however. We will negotiate the best terms for the best companies. A 'plug n play' approach allows for smooth transitions with little interruption to business flow." If interested in having an initial discussion, please email me so a direct connection can be made; please specify opportunity. 

LOs who prefer builder business: "Builders, are you struggling to find consistency with your lending partner? MLOs, do you have a relationship with a builder but are stuck with an inefficient lending platform that throttles your ability to grow, or worse, puts you at risk of losing the relationship? OneTrust Home Loans is adding to its successful and proven Builder platform. OneTrust's most recent onboarding in this area was a team of 50+ who, in less than 6 months with OneTrust, has stabilized and increased its capture rate to record levels and is on target to fund over 200 loans in May - a 100% increase within one year with OneTrust. OneTrust's Ownership and Executive Team have significant experience supporting preferred lending relationships with builders and we focus on strategic growth by searching for the right match to ensure the onboarding transition goes exactly as required. Please contact OneTrust's CEO, Joshua Erskine, directly to schedule a CONFIDENTIAL conversation about your situation and the opportunity. OneTrust has grown by 800% in its first 3 years, all while reducing all major operational KPIs including turn times and cost per closed transaction. 

In AE news, Pacific Union Financial, LLC is pleased to announce the hiring of Lynnea Craig-Dunn as the new Regional Wholesale Sales Manager for the Northern California and Nevada territories. "Lynnea brings a wealth of experience managing sales at other large lenders. "I'm very excited about joining Pacific Union. This is a dynamic organization with an aggressive vision for growing the wholesale channel. I am aligning myself with a leadership team that is committed to partnering with clients in sales support by providing exceptional service and top notch account executives. With my experience in the Northern California and Nevada region we can quickly expand our sales team and grow our volume," Lynnea said. If you are an Account Executive in the Northern California or Nevada region and interested in joining a company that is financially strong with solid leadership, please contact Greg Armstrong, West Division Manager or Susan Trejo, Corporate Recruiter.

A well-capitalized lender/servicer backed by a deep-pocketed capital partner is looking to hire an SVP focused on Mergers and Acquisitions. The company has plans to execute multiple M&A deals over the next few years and is looking for an experienced executive to drive and manage this process. Job duties will include identifying and screening prospects, driving negotiations, valuation analysis and deal structuring and managing the process through due diligence and post-closing integration. Candidates should hold at least a bachelor's degree in finance (preferably a CPA, CFA or MBA), accounting or business-related major with at least 10 + years of mergers and acquisitions experience. If interested, please contact me and specify the opportunity.

"As Citywide Home Loans continues an exponential journey of growth, we are looking for key professionals to join us as we climb to the next level of success. Citywide is currently seeking a National Director of Operations, a National Training Manager, and an Encompass Manager. Have you been where we are? Have you plotted a course to the top of efficiency and accuracy for Operations? Have you trained the best of the best in the mortgage industry? Have you rolled up your sleeves and conquered Encompass? If so, we would love the opportunity to speak with you and see if it makes sense to take the next steps. Email your resume and a brief cover letter to Fawn Bird (801-734-1740). Our headquarters is in Sandy, Utah although the Training and Encompass opportunities have the potential to be remote positions.

Congratulations to Cathy Brogan who PRMG brought on as its Retail Regional Manager for the Colorado and Rocky Mountain Territory. Cathy brings with her over 30 years' experience in the mortgage industry and will be focusing on providing continual guidance and support to existing branches residing within the state of Colorado.  More importantly, she will be looking to recruit experienced and motivated individuals interested in branch opportunities as well as originating opportunities throughout the Rocky Mountain region and beyond for PRMG. "We very are excited about the addition of Cathy Brogan to the PRMG Retail team. Along with her experience, education and proven track record we are confident that she will be successful in helping us grow the Colorado, Rocky Mountain region as we continue to expand our national retail platform across the country," said Chris Sorensen, SVP, Director of National Retail Production, PRMG. Voted No. 1 of the 50 Best Companies to Work for in America 2015; No. 1 Best in the Desert 2017; and TOP 25 of 100 Mortgage Companies in America!  PRMG employs over 1,300 people across the country! Contact Chris Sorensen (909.262.0452).