Hello from the MBA Secondary Conference in NY! Lenders are talking about LO comp (“they need to share the margin pain, but no one wants to be the first to outright cut it”) and Amazon…but anyone afraid of Amazon creating a mortgage company should learn a little something about it. For example, Amazon is relentless regarding the customer experience, even if it cuts into short-term results. Every employee, including CEO Jeff Bezos, spends at least two days a year working in the call center or sales department. This ensures a companywide understanding of customer satisfaction and it might be an interesting idea for bankers to consider. How much time does a lender’s CEO spend on the phone with borrowers, processing, or servicing loans?
Lender Products
Join this week’s webinar -- 6 Growth Tips for Leaders in Lending – on May 25, from 10-10:45am PT. Register Here. If you’re ready to scale your organization and want to make sure you have the right strategy in place, this webinar is for you! Join industry experts, Dale Vermillion (Mortgage Champions) and Josh Friend (Insellerate), as they go over best practices for top lenders. Prepare to take your organization to the next level by learning how to maximize every area of your business, how your sales team can get rid of inefficiencies affecting your bottom line, reduce wasted marketing spend, and get more from your current resources.
At the National Secondary conference this morning, LendingQB and MCT announced an integration between the LendingQB loan origination platform and the new Bid Auction Manager (BAM) technology within the MCTlive! secondary marketing software platform. "LendingQB and MCT are changing the way that secondary marketing is done," said David Colwell, Vice President of Strategy at LendingQB. "We now have the ability to manage a 'closed loop' secondary marketing process: originate, price, lock, execute trades and then store the commitment in an entirely digital fashion. Lenders and investors can communicate and respond to each other quickly and accurately. This is the future of secondary marketing." Full details on the integration can be found in a joint press release. Review a case study of one LendingQB client’s experience improving efficiency and pickup after implementing BAM.
Homespire Mortgage has announced the launch of its digital mortgage platform – ReadyApp. The digital platform streamlines the entire mortgage application process, delivering a best-in-class lending experience. ReadyApp offers borrowers a simple, seamless and secure . The digital mortgage platform lets borrowers complete a mortgage application on any digital device in as little as 15 minutes and enhances the borrower experience with integrations for pulling bank statements, income and tax returns, as well as document upload. The platform uses state-of-the-art encryption to integrate with over 15,000 financial institutions. “Providing a simple and stress-free mortgage experience has been the hallmark of Homespire Mortgage. ReadyApp reinforces this commitment to borrowers,” said Todd Sheinin, Chief Operating Office at Homespire Mortgage. Homespire Mortgage was recognized on the Inc. 5000 list of America’s fastest growing private companies in 2017 and recently expanded its presence into 25 states and the District of Columbia. The company plans to expand with a national call center and licensing in additional states next year.
Have you given serious consideration to the benefits of vendor consolidation? If you are using several third-party verification providers, you should investigate the efficiencies you could realize by reducing that number – perhaps even down to one. By vetting and managing fewer vendors, you can spend more time doing what you do best: closing loans The Credit Plus Collection is a comprehensive gallery of verification services from pre-application to post-close that can give you the intelligent insight you need while saving you both time and money. Learn more here.
Life for Correspondent Lenders
It isn’t the first and won't be the last. “For many years, we at Regions Bank have valued and appreciated our relationship with you through our correspondent lending program. For that reason, I am writing to inform you that we (Regions) have made the strategic decision to exit the corresponding lending business, effective May 31, 2018. As a result, the agreement will terminate on July 31, 2018 unless it is terminated earlier by either of us and subject to any provisions which may survive termination. As we phase out our correspondent lending business, please note the following key dates: May 31, 2018 last day your loans may be received by Regions. July 31, 2018 all committed loans should be delivered on or before this date.
Yes, loan officers think that their pricing struggles are rough – and they are. But does our industry really need 100+ correspondent lenders of various shapes, sizes, and market segments? Margins are very thin to non-existent as competition for servicing rights is dog-eat-dog, and private equity servicing values are increasing which also compounds pricing competitiveness and margin attainment.
Many of the small mortgage company M&A deals aren’t even announced – 5 or 10-person shops heading to larger regional or national retail lenders. But big ones occur. Renasant Corp is buying Brand Group Holdings, Ocwen buying PHH, New Penn buying Envoy’s correspondent group, Finance of America buying Skyline’s assets, Mutual of Omaha Bank buying Synergy One Lending, for example.
Bank M&A is strong, and public. Just this month, so far, it was announced that Cadence Bank ($11.0B, TX) will acquire State Bank ($4.9B, GA) for $1.4B in stock (100%) or about 2.5x tangible book. In Missouri Stifel Bank & Trust ($15.3B) will acquire The Business Bank of Saint Louis ($620mm). Gulf Coast Bank and Trust Co ($1.6B, LA) will acquire Phoenix Capital Group. (Phoenix provides freight factoring, equipment financing and fuel cards.) In Michigan Credit Union ONE ($1.2B) will acquire Hantz Bank ($223mm). Five Star Bank ($4.2B, NY) will acquire HNP Capital LLC. (HNP is an investment advisory and wealth management firm with $334mm of assets under management.)
In Arkansas Legacy National Bank ($475mm) will acquire Bank of Gravett ($118mm), and First National Bank ($1.3B) will acquire One Bank & Trust ($274mm). In Massachusetts Salem Five Cents Savings Bank ($4.7B) will acquire Sage Bank ($143mm). First Virginia Community Bank ($1.1B) will acquire Colombo Bank ($196mm, MD) for about $33.3mm in cash and stock or about 1.57x tangible book. In Iowa Peoples Bank ($501mm) will acquire Pinnacle Bank Sioux City ($71mm). And don’t forget that earlier this month it was announced that Mutual of Omaha Bank ($8.1B, NE) will acquire San Diego’s Synergy One Lending.
In Illinois 15 bank holding company Wintrust Financial ($28B) will acquire Delaware Place Bank ($249mm) for approximately $34mm in cash. In Kansas Legacy Bank ($365mm) will acquire First National Bank in Pratt ($105mm), and Capitol Federal Savings Bank ($9.0B) will acquire Capital City Bank ($434mm) for about $37.5mm in cash and stock or about 1.41x tangible book. CoastalStates Bank ($442mm, SC) will acquire Foothills Community Bank ($95mm, GA) for $11.6mm in cash and stock. Over in Texas Allegiance Bank ($2.9B) will acquire Post Oak Bank ($1.4B) for stock (100%) or about $350mm or about 2.23x tangible book. In the home of the Harley Davidson, Security Financial Bank ($420mm) will acquire Pioneer Bank of Wisconsin ($74mm.
Capital Markets
Just because your company sent someone to the secondary conference here in New York doesn’t mean they can stop rates from moving higher. But my guess is that they’re trying to improve pricing by a few basis points. Job openings and unemployment data have continued to impress. The Job Openings and Labor Turnover Survey for March set a new record with a job openings rate of 4.2 percent. Meanwhile initial jobless claims have been holding at great levels - the four-week moving average of initial claims was the lowest since December 1969.
While many economic metrics in the first quarter were strong, first quarter GDP was not stellar. Many of those metrics were near cycle highs and could drift sideways or lower in Q2; however net exports and residential investment, which held back GDP, appear poised to strengthen in the second quarter. With April’s jobs report, unemployment fell to 3.9 percent, its lowest since December 2000. Monthly job growth was a modest +164,000, however upward revisions for the previous two months brought the three-month average to +208,000. Wage growth was minimal despite signs of upward pressure in other reports.
Inflation remains at the forefront of everyone’s mind as headline metrics ticked higher this spring. The 12-month change in the Consumer Price Index was 2.36 percent in March and the 12-month change in the Producer Price Index was 3.04 percent. Pressures on commodity prices as well as wage pressure are expected to continue in the coming months.
The Federal Open Market Committee (FOMC) kept the Fed funds rate unchanged in May, but expectations are high for an increase of 25 basis points in June as well as a third hike after the September meeting. If inflation remains warm or heats up through the middle to end of the year, it will strengthen the case for a fourth hike in December.
Fed Cleveland President Mester said the economy is growing above trend, which could lead the Fed to increase the fed-funds rate higher and faster than expected to ensure the US avoids a buildup in risks to macroeconomic stability.
Rates were up again to end last week as investors assessed conflicting signals on trade talks between the U.S. and China. Economic releases were nonexistent on Friday, but there were some stories of note. The U.S. Dollar Index recorded its fourth weekly gain in the past five weeks. It has now risen nearly 4.5% during that stretch. In Italy, Movimento 5 Stelle and Lega have agreed on a governing platform and expect to nominate a prime minister in time for Monday's meeting with President Mattarella.
The MBA National Secondary Market Conference & Expo kicked off yesterday in NYC and runs into Wednesday. Not to be jaded, but the sessions include sessions that have been concerns for the market for many years, and probably will be into the future: housing finance and regulatory reform, a panel discussion regarding long term solution for housing finance, economic outlook, the state of the market for MSRs and an update on the GSEs' SS initiative.
This week's calendar includes a heavy dose of Fed presidents speaking as well as the minutes from the May 1/2 FOMC meeting on Wednesday. Economic releases include regional Fed surveys, new and existing home sales, durable goods and Michigan sentiment before and early close on Friday for the long Memorial Day weekend. Today's calendar kicked off with the Chicago Fed's National Activity Index for April (strong at +.34). The first of the day's three Fed speakers sees Atlanta's Bostic, Philadelphia's Harker, and Minneapolis' Kashkari. Rates start the week a shade higher versus late last week: the 10-year is yielding 3.08% and agency MBS prices are worse nearly .125.
Employment and Personnel
Plaza Home Mortgage, Inc. has a rare opportunity for a qualified Account Executive role in the South Florida region with a strong producing territory. This individual will inherit a pipeline of active loans, as well as over 50 accounts already signed up. Join a growing team with a very competitive compensation plan, top-rated training in the industry, real-time marketing and a regional operations center with unmatched support! For more information on this opportunity, please contact Mark Boleky (904-332-6380 ext. 2409). Plaza is an EEOC employer and follows all laws relating to fair employment. Company NMLS #2113
In MI job news, “Are you looking to join an organization with great history, culture, and opportunity? If so, MGIC, the founder of the private mortgage insurance industry, has a great opportunity for an ambitious sales professional to cover the State of Alabama, as well as the Florida Panhandle. As an Account Manager, you will develop and maintain strong, long lasting client relationships as well as grow business by identifying new business opportunities. The ideal candidate must have strong presentation and communication skills, and the ability to occasionally travel overnight. This person will report directly to Steve Cox, Sales Manager. If you are interested in joining a company with 60 years of industry leadership and legacy, please send your resume to Nancy Vang-Lee, Senior Talent Acquisition Partner.
Congrats to Rob Branthover who has been appointed as Director of the Fixed Income Sales team at ED&F Man Capital Markets, the global financial brokerage business. Rob began his career in financial services in 1987 and posts include Mortgage Industry Advisory Corp (MIAC), Lehman Brothers, and JPM Chase Mortgage.
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