There’s plenty of talk about real estate agents, appraisers, and loan officers being replaced by artificial intelligence or robots. In legal news, JPMorgan unleashed artificial intelligence to automate its legal work and saveover 360,000 hours of work each year by lawyers and loan officers. Given personnel costs, that's a lot of doubloons. More bank news below.

Bank news

Several banks reported 2nd quarter earnings on Friday with results that generally topped analyst's expectations. But residential mortgage banking was poor. At JPMorgan Chase mortgage revenues fell 26% compared to a year ago, fell 52% at Citigroup Inc., and was down 19% at Wells Fargo to $1.15 billion. The results reflect what most lenders already know: even though home purchase activity has increased throughout 2017, refinancings are down since after several years of great rates, nearly every homeowner who could refinance already has. And banks have shifted assets to more profitable business channels.

America's largest banks originated less residential mortgages in the first quarter, but their share of the overall pie increased the latest sign that the origination market is shrinking. The five largest U.S. banks originated $111B worth of residential mortgages in the first quarter, well below the previous quarter's $143B, according to data from the MBA. Most industry analysts had expected overall mortgage lending-refis and purchase together-to decline about 20% in 2017-but it's down about 30% industry-wide - so if your company's volumes aren't down that much, congrats.

Due to costs (low margins), Basel III concerns, potential liabilities/costly regulations, and so on, large banks are also reducing their exposure to mortgage servicing. Wells booked $360 million in income from servicing in the 2ndquarter, down 11% from a year earlier, while Citi had servicing rights that were 58% lower than the same period a year ago.

How's your bank account? Are you hoarding money in banks? The FDIC tells us that total bank deposits rose 6.6% last year to $10.7 trillion. Deposits measured as a percentage of bank assets are 77.6% in the first quarter of 2017, the highest since 2006, according to data economic research firm Moebs Services. 

You should know that Wells Fargo announced it will sell its commercial insurance business, Wells Fargo Insurance Services USA, to USI Insurance Services LLC (NY). And recall that New York Community Bancorp ($49B, NY) said it will sell about $500mm of selected residential mortgage assets and servicing rights on over $20B of residential mortgage loans to Freedom Mortgage Corp (NJ) as it focuses on its core business model and higher earning assets.

Although their financial strength remains strong, U.S. banks face a variety of risks, and many of those may lay beyond their control, according to a review released by the U.S. Office of the Comptroller of the Currency found that risks to banks lurk in competition from nonfinancial lenders, their reliance on third-party service providers for cyber security and regulatory compliance, and in the rapid evolution of money laundering and terrorism financing methods. The agency also found that U.S. banks' revenue increased 3.6 percent in 2016 from 2015, mostly due to their net interest income - the difference between interest earned on assets and paid on liabilities - which had the largest gain since 2010.

The OCC is focusing on credit risk, compliance risk and strategic risk as its top supervisory priorities at community and midsize banks, according to the agency's Semiannual Risk Perspective report. For larger banks, compliance, governance and operational risks remain dominant concerns. The OCC warned bankers that it will be paying "close attention" to the potential strategic risks that may be growing in banks because of taking on new financial technologies.

And the Financial Stability Board is warning a crackdown on BSA/AML by US agencies and subsequent de-risking activity by banks, has led to a decline in correspondent banking relationships that now poses a threat to the stability and integrity of the global financial system.

The Summer 2017 FDIC Consumer News alerts the public to common scams and provides basic tips for protecting personal information and money. Also, in this issue, is a look at how the FDIC is working with banks, nonprofit organizations and other government agencies to bring more low- and moderate-income Americans into the financial mainstream by improving access to safe, secure and affordable banking services. The Summer 2017 FDIC Consumer News is available for both reading and printing.

Bank & credit union M&A 

In Florida West Coast Federal Employees Credit Union has merged with USF Federal Credit Union. The combined financial institutions have more than $600 million in total assets and over 62,000 members. United Business Bank ($698mm, CA) will acquire Plaza Bank ($70mm, WA) for about $10.8mm in stock. In New Jersey OceanFirst Bank ($5.2B) will acquire Sun National Bank ($2.3B) for about $487mm in stock or about 1.69x tangible book. In Virginia Bank of McKenney ($231mm) will acquire Citizens Community Bank ($216mm) for about $19.0mm in stock. United Community Bank ($10.7B, GA) will acquire Four Oaks Bank ($734mm, NC) for about $124mm in cash (10%) and stock (90%) or about 1.77x tangible book. In Iowa Community State Bank ($160mm) will acquire First State Bank ($42mm). In Massachusetts, East Boston Savings Bank ($4.6B) will acquire Meetinghouse Bank ($118mm) for about $17.8mm in cash. And the Bank of Montgomery announced the signing of a definitive purchase and assumption agreement with MidSouth Bank pursuant to which BOM will acquire all the assets and liabilities associated with the two branches of MidSouth Bank located in Alexandria, Louisiana.

Training and events

There is Plaza's July 17th Liquid Asset webinar. This course explains how the most common liquid assets work and what documentation is required for conventional mortgage financing. We'll walk through industry guidelines for liquid assets and show you examples.

Join legal advisor Chrys D. Lemon for an on-demand webinar, July 18th on Marketing Service Agreements, Desk Rentals, RESPA rules & referral fees.

Join Plaza on July 19th for a webinar about Fannie Mae's Day 1 Certainty and Plaza's Rapid Plus Mortgage Program. This webinar will review best practices that originators may find helpful when using the program at the point of sale.

Join Calculated Risk's Bill McBride for a webinar on July 20th. Find out Bill's Top 10 questions that encapsulate upcoming economic issues, those that have transpired and what the rest of 2017 will look like.

Join MBAC and Freddie Mac on July 26th for a free webinar: How to Combat Mortgage Fraud.

Capital markets

When there are no economic news or announcements to move the market, it is this government gridlock which moves the market, and helped move it higher Friday. (The 10-year rallied .250, closing yielding 2.32%.) The Consumer Price Index number helped, and an early rally took the 10-year yield to 2.28%.

Over the weekend we saw some strong economic numbers from China. Looking at this week's scheduled economic news in the U.S., there is a lot of housing news - and housing and jobs drive the economy. This morning we've already seen the only news of the day: The Empire State Manufacturing Index (July) at "9.8" - weak. Tomorrow we will see import and export prices, and the NAHB Housing Market Index from the home builders. Wednesday the 19th is last week's residential mortgage application data, along with Housing Starts & Building Permits. Thursday is initial jobless claims, a Philly Fed number, and Leading Economic Indicators. We start the week with the 10-year yielding 2.31% and agency MBS prices better by nearly .125 versus Friday's close.

Jobs, correspondent lenders, personnel moves, & new products

Social Finance (SoFi) is currently offering a great opportunity for experienced loan officers with experience in New York looking to grow their business. Last month SoFi applied with the FDIC to obtain a de novo bank charter, and the company is the recipient of a recent funding round. MLOs are ultimately responsible for the customer experience throughout the mortgage origination process by guiding the customer through the process of qualification, structuring a deal, underwriting, rate-lock, closing and funding. SoFi is currently hiring experienced loan officers with active licensing in New York or Delaware. To setup a confidential consultation, contact Joel Kiskila or call (385) 831-7007.

Caliber Home Loans receives recognition for its ongoing support to the military and veteran community, earning itself a spot on the Military Friendly® Brands List for 2017. Victory Media awards this designation to brands who make a company-wide investment to service members, veterans and military families, both in employment and product-offering. Caliber exceeded the Military Friendly® benchmark standards in the areas of Policies and Governance, Transparency, Consumer Indicators and Community Indicators. "Since Caliber introduced our first lending and community outreach initiatives in 2016, we've all worked hard to provide veterans and military families with the service and support they deserve. Everyone here is thrilled by the news that we've earned the Military Friendly® Brand designation," said Bryan Bergjans, National Director of Military and Veteran Lending at Caliber Home Loans. To read more about this honor, check out the full release here. And to learn more about how Caliber Home Loans can support your unique military and veteran needs, reach out to Bryan Bergjans or visit https://www.calibermilitarylending.com/.

Apex Home Partners is a newly-formed company led by industry vet Mark Filler. "Apex is extremely well funded by a leading private equity firm. Apex will have 3 businesses. We will buy and rehab thousands of single family and small multifamily properties nationwide. We will also provide preferred equity to strong residential investors that want to buy these properties. The third business provides commission advances to Realtors. We are hiring senior level candidates with extensive experience in: 1. Buying small residential properties, including national construction expertise; 2. Digital marketing and lead generation; and 3. A President and a Head of Realtor Relations for the real estate broker commission advance business. All candidates must live in Chicago. Please send resumes (and residential real estate deals) to Mark Filler."

Banc of California's Portfolio Lending Division is now accepting new Wholesale and Correspondent partners in 46 states. "With over $1.5 billion in Non-QM loans originated in 2016, Banc of California is the leading Non-QM lender in the space. The firm's products include a variety of NonQM and Alternative Documentation products that distinguish originators from their competition. If you would like to find out more about becoming a Wholesale or Correspondent partner, please reach out to the firm's National Sales Manager, Adam Liebross, for more information."

Mortgage technology and AVM provider, Veros, announces the launch of its next-generation VeroSELECT API, which streamlines both the ordering and processing of AVMs with Broker Price Opinions (BPOs), Property Condition Reports (PCRs) for high-volume users to not only save time, but also strengthen risk decisions. Clients can integrate, customize and extend volume ordering in one quick API call. Supplement AVMs with a PCR or BPO in one order to strengthen HELOC underwriting. VeroSELECT valuation management provides untethered access to the industry's top performing AVMs-including Veros' flagship AVM, VeroVALUE. Third-party tests consistently rank VeroVALUE #1 in hit rates and valuation accuracy. VeroVALUE supports Quality Control processes, and includes confidence scoring-enabling lenders to predict collateral risk, identify loans for further review and validate appraised value with confidence. With fluctuating home values, VeroVALUE Portfolio delivers pin-point, up-to-date property values and market movements on a broad spectrum of properties. To run a free market test, contact Susan Anderson (860-402-8337).

Texas Capital Bank, N.A. announced that Shannon Smith has joined its Correspondent Lending group as an account executive. Shannon has over 25 years of experience in the mortgage industry in various capacities including previous sales and finance positions on Wall Street. She will be spearheading their efforts to grow the Southern California region. Texas Capital Bank also recently expanded its Correspondent Lending product matrix to include both one- and two-time close construction to permanent (CTP) mortgage loans. For more information, contact your local account executive or National Sales Manager Matthew Mead. Texas Capital Bank's Correspondent Lending group is part of its Mortgage Finance division which specializes in supporting mortgage lenders nationwide with warehouse and MSR credit, liquidity and banking solutions. Texas Capital Bank is consistently recognized as one of Forbes' Best Banks in America and is a Member of the FDIC. 

SocialSurvey is excited to welcome its newest Regional VP of Business Development,  Andrew Pierson. Covering the Southeast for SocialSurvey will be the next challenge in his career in mortgage tech sales. Andrew was previously with Smarsh and joins SocialSurvey to cover SC, GA, FL, AL, MS, and TN, so contact Andrew directly if you are a lender in those states and want to find the most effective reputation solution in the industry. "Unlike some systems that ask a static set of over 20 questions, SocialSurvey has a short and easy to complete survey that can be customized by each lender. Response rates are typically over 50%. If you want to make a career move and introduce SocialSurvey in SoCal, the Rockies, or Midwest, hurry and contact Ayesha Faiz with your confidential resume submission."