As the productivity of the male part of our industry grinds to a screeching halt due to looking up “Beach volleyball cheerleaders” on Google Images, I can think of nothing I’d rather do than spend my workday reading about the Consumer Finance Protection Bureau. For others who feel the same way, they should check out Mayer Brown’s CFPB Five-Year Retrospective.

Of course lenders that do business in multiple states must pay attention to changes in various places in addition to whatever the federal government and the investors are doing. There has been some recent state news of note.

For example, the state of Ohio has created the D.O.L.L.A.R. Deed Program which provides a loss mitigation alternative for borrowers in default on their mortgage. This creative program gives those struggling to pay their mortgages an unconventional way to maintain and reclaim rights and possession of their real property. In order to qualify for the Program, the mortgagor in default must submit an application and a request for modification and affidavit form developed under the home affordable modification program. The applicant must occupy the residence and his or her front-end and back-end debt-to-income ratios must fall below the current ratios set for the home affordable modification program. The lender is not required to participate in the program, but must respond to the applicant within 30 days.

The state of Ohio has amended provisions regarding its judicial foreclosure process as part of a bill signed by the governor on June 28^th, 2016. One provisions enacted was to improve the process of foreclosure. This section allows the foreclosure process to be expedited in the case of a vacant and abandoned property.  A mortgagee may file a motion with the court to proceed in an expedited manner if the mortgagee is entitled to enforce the instrument secured by the mortgage. If the property is deemed by the court to be vacant and abandoned the court shall enter a final judgment and decree of foreclosure and order the property to be sold.

If a residential property is found to be vacant and abandoned, then the mortgagee may enter the property to protect it from damage.  In the case of a mortgagee that has not filed a foreclosure action on the property; the mortgagee may only enter and secure the property if the mortgage or some other contract allows the mortgagee to do so.  The equitable and statutory rights to redemption of a mortgage, secured by a property that is found to be vacant, expire upon the confirmation of sale of the property. These provisions are effective 91 days after filing with the Secretary of State. The complete text of the bill which contains these sections can be found here.

Effective October 1st, 2016 the General Assembly of North Carolina Session 2015 Session Law 2016-86 Senate Bill 19 S19-v-5 updates fees for filing a deed of trust so that they are compliant with the Truth in Lending Act. Fees collected under this section shall be deposited into the county general fund. The updated fees for filing a deed of trust are: $64.00 for the first 35 pages and any additional pages regardless of length will cost $4.00 each. A deed of trust or mortgage that is registered with additional instruments shall incur a fee of $10.00 for each additional instrument. Recording records of satisfaction or cancellation of any deeds of trusts or mortgages will not incur any cost.

One common question that those in the primary markets have is, "What happens to these loans that we fund?" The large majority of them are currently being securitized. The Fannie Mae TBA (to-be-announced) and Freddie Mac PC (participation certificate) market is the recipient of the usual conforming loan - Fannie Mae or Freddie Mac 30-year & 15-year mortgages. But when a lender funds a Veterans Affairs or Federal Housing Authority loan, that loan is securitized and put into a Ginnie Mae TBA.

The biggest difference between Fannie Mae MBS (mortgage-backed securities) and Ginnie Mae MBS is that Ginnie Mae MBS have an explicit guarantee from the federal government. Despite being under government conservatorship Fannie Mae MBS & Freddie Mac PCs don't have a guarantee quite like that, and therefore are viewed as slightly riskier. Therefore, some investors tend to purchase more Ginnie Mae MBS, and those trade at a premium to Fannie & Freddie securities.

Who is buying these securities? The New York Federal Reserve continues to purchase $2-3 billion a day of agency MBS. Mortgage REITs are also big users of TBAs because they can increase or decrease exposure quickly using current coupon securities - new production. While older MBS issues can become illiquid, there's always a large liquid market in TBAs.

Turning to the markets, congrats to that understaffed group known as Ginnie Mae. Ginnie Mae had record MBS Issuance.  Residential and commercial loan securitizations on behalf of the Government National Mortgage Association climbed to the highest level on record last month. If you dig into the numbers you will find that as of June 30, there were $1.7 trillion in Ginnie Mae mortgage-backed securities outstanding.

While I am talking about older loans, Fannie Mae released some performance data on modified loans. Originators don't care too much about this data, but investors certainly do, and these numbers enable investors to better understand the expected performance of Agency MBS backed by re-performing loans.

Brexit is the big celebrity gossip story while the crisis of Italian Banks lurks unnoticed in the background. I'm not sure how that counts as a catchy intro but I think I have your attention so, do Italian banks pose a global systemic risk? Some economists will say that the simple answer is "no" because banking systems in most other countries (including the U.S.) do not have a substantial amount of exposure to the Italian economy.

One thing that lenders should know about, however, is that the Italian banking crisis could potentially bring banking systems in other Euro zone countries under the spot light. What is happening in Italy? Italian Bank share prices are plummeting, and real GDP in Italy is no higher today than it was 15 years ago. It is hard for banks to increase profits when the economy is not growing. Even without growing GDP, Italy still has one of the 10 largest economies in the world so that would lead one to believe that an Italian banking crisis would have a more profound affect.

Foreigners, however, do not have an immense amount of exposure to Italian banks, which should limit the ability for any banking crisis in Italy to spread around the world. Wells Fargo points out that France has the most on the line with $300 billion in total assets in Italian banks; but that is only 5% of France's total assets. Overall, "a banking crisis that was confined solely to Italy should not ignite a global banking crisis. But any potential contagion effects emanating from Italy would certainly warrant watching."

In this country, the Federal Home Loan Bank of San Francisco announced that the monthly weighted average Cost of Funds Index (COFI) for June 2016 was 0.690%. The index for May was 0.691%. While the difference in these two numbers may seem small, changes in interest rates on adjustable rate mortgage loans offered by many financial institutions are tied to changes in the COFI. (COFI is computed from the actual interest expense reported for a given month by the Arizona, California, and Nevada savings institutions members of the Bank that satisfy the Bank's criteria for inclusion in the COFI - "COFI Reporting Members."

Yes, rates are darned low, and continued low Wednesday as the yield on the 10-year shuffled from 1.54% Tuesday to 1.51%. We know that supply & demand set MBS prices which in turn are the primary driver of rate sheet pricing. It seems that supply of new securities looks to remain near the $3 billion per day area, and the Fed continues to buy $2-3 billion per day. See how that works? That being said, the most recent Federal Reserve's schedule shows daily purchases dropping well below the $2 billion per day level, so we'll see if that impacts the supply & demand balance.

Thrilling economic news today consists of Import and Export Prices for July (imports were +.1 versus +.6% in June; export prices were +.2% in July versus +.8% in July). Also released was Initial Claims (266k, down 1k from a revised 267k, about as expected). The U.S. Treasury Department wraps up its quarterly refunding with $15 billion in 30-year bonds on the block.

Tuesday the 10-year T-note price improved nearly .375, ending with a yield of 1.51%, the 5-year T-note improved a little over .125 as did agency MBS prices. This morning the 10-year is sitting around 1.51% with agency MBS prices unchanged from Wednesday's closing levels.

Jobs and Announcements

On the retail side of things, as we learned in the Originator Census column in last month's STRATMOR Insight Report, the top 20% of loan officers originated more than twice as many units per month versus the average producer. The Originator Census survey provides detailed comparisons of Originator productivity across production quintiles, originator age, tenure and operating model. The latest set of results cover 2015 activity for both Independents and Bank Owned or Affiliated mortgage companies. The census collected information for over 15,000 originators from companies with under 100 LOs to those with over 1,000 LOs. Results were distributed to participant lenders this April, but the survey is open for additional registrations through August 19. To read more about the survey including the data requirements visit the website STRATMOR Originator Census or contact originatorcensus@stratmorgroup. com. 

For something more forward looking, Homeward Residential is growing and looking to add 50 underwriters to its growing operations team. "We are looking for energetic and experienced underwriters in both our retail and wholesale channels," says Greg O'Connor, President of Homeward Residential, Inc. "We have opportunities for experienced remote underwriters, as well as in our Westborough, MA; Coppell, TX and Fort Washington, PA offices."  If you would like to be a part of a growing team with opportunities to grow your career, please contact Michelle Cisneros.

An exciting, well-known, and rapidly growing, mid-size independent mortgage banker located in the Houston, TX area is looking to add a talented professional person to fulfill a SVP/EVP of Operations position. "We are willing to relocate someone that would be a good fit to add to our team that has an entrepreneurial spirit to help continue to build and lead a high-performing operations team." The 10-year old nationwide residential lender is seeking an experienced SVP/EVP of Operations. The company is a Fannie approved lender, issuer, and servicer.  They are funding well over 1 billion a year just in their retail channel. The Candidate should have experience with all aspects of loan origination.  If you are interested, please forward your resume to me and specify the opportunity.

Assurance Financial has a solid reputation for closing loans on time. It's what we do. Our back office supports its mortgage loan originators and branch managers so they can focus on originating more new loans rather than worrying about closing their pipeline. Assurance is expanding its footprint throughout the Southeast and Southwest and looking to hire branch managers and MLOs in Arizona, Colorado, New Mexico, Texas, Arkansas, Louisiana, Mississippi, Tennessee, Alabama, Ohio, Virginia, North Carolina, South Carolina, Georgia, and Florida. For more information, contact Paul Peters, CMB at 225-239-7948 or visit www.LendTheWay. com/Careers.

A quick congratulations to Shabi Asghar, the newly appointed President of PacificBanc Mortgage. Shabi will embark on a mission of rapid expansion for the 25-year old wholesale company.