”Rob, I've heard that the fines that a company pays to the CFPB are tax deductible. So therefore the money is just transferred from one government agency to another. True?" Fines are never deductible, like a traffic citation or a penalty paid due to late taxes. But monies paid back to borrowers from prior years do indeed reduce income, and are deductible in the current year. Speaking of penalties, remember Taylor Bean & Whitaker Mortgage Corp.? Disgraced former chairman Lee Farkas has asked the U.S. Supreme Court to review his conviction and 30-year sentence over an alleged $2.9 billion fraud scheme, blaming his plight on error-prone trial and appeals court lawyers.

Before moving on, my note yesterday about Lenders One providing a $4,000 credit for its members to join the Community Mortgage Lenders of America (CMLA) actually told only half of the story. Bill Shepro, CEO of Altisource Portfolio Solutions, the parent of the Lenders One management company, told attendees of last week's Lenders One conference that the same credit applies whether a lender joins CMLA or the Mortgage Bankers Association. It is all about enhancing the industry's advocacy efforts. "We know that you want to be actively represented in the political process in Washington.  And if we are going to enact legislation favorable to independent mortgage bankers then we need your voice in the debate. We are going to make joining these important industry groups easier and less-costly for you by providing you a credit of $4,000 a year against your membership dues," said Shepro.

Speaking of advocacy and groups contributing toward the industry, the Pacific Northwest Mortgage Lenders conference is coming up between Sunday September 13 and Tuesday September 15 in Seattle.

The New York Mortgage Bankers Association will be holding its annual convention in Syracuse at the Genesee Grande Hotel September 1-3. The group has an abundance of speakers including the fabled MBA Chairman Bill Cosgrove and the MBA's Associate Vice President of Government Affairs and Industry Relations, William Kooper, and MBA's Assistant Director of Government Affairs, Scott Nowak. Also there will be representatives from the New York Department of Financial Services, Bruce Bergman, New York's leading attorney on foreclosure and author of many books and article on the subject; David Stein, Bricker and Eckler (website compliance); and more.

Are you ready for the CoAmp's Colorado Rockies August 21^st Round Up? Don't miss out on the opportunity for you, your family, friends and referral partners to watch the Colorado Rockies VS. New York Mets on the rooftop of Coors Field! Don't delay, register now for the Colorado Rockies Round Up.

MBA's August 18^th webinar on selecting the most suitable Vendor or Service Provider will guide participants through the complex processes of making the right choice by providing attendees with the necessary framework to help make an informed decision. The course will be centered on determining the key requirements necessary to manage a successful selection program from a business and technical perspective and conclude with real world case studies tailored to specific interests. Click here for additional details and registration information.

The Real Estate Services Providers Council, Inc. (RESPRO^®) will host a webinar on the impending implementation changes to RESPA and TILA.  On September 10, RESPRO^®'s President & Executive Director, Ken Trepeta, will explain to those who work with consumers what they need to know about the upcoming October 3rd TRID execution. Focusing on the practical things you need to know so your customers and clients have smooth transactions during this period of change.

We have had a plethora of mortgage-related companies issuing their earnings for the 2^nd quarter of 2015. Walters Investment Management (WAC) reported operating EPS of $0.65, which excludes step-up D&A, positive MSR marks, and other items. Analysts thought that some expenses were excluded from operating income. Tangible book value per share rose to $10.62 from $9.91. PHH recently reported earnings, causing a dramatic drop in share price - they now trade at roughly 65% of book value. The biggest concern in the market appears to be regulatory risk, although most of it is related to matters that had been disclosed earlier. PHH announced that it was delaying its $250 million buyback after considering regulatory uncertainties and a need to scale up to meet return objectives. Positively, PHH noted that it had substantially completed it's PLS negotiations.

Stonegate Mortgage (SGM) missed some estimates due to higher compensation expense. KBW's operating EPS estimate excludes a $20.8 million MSR mark, $0.8 million of stock comp, and a $3.1 million loss on MSR sales. Earnings per share estimates were trimmed on lower gain on sale margins. Stonegate's gain-on-sale margin came in at 149 bps, down from 186 bps last quarter, mortgage origination volume rose to $3.44 billion from $2.84 billion in 1Q but rate locks per day averaged $70.6 million in 2Q versus $80.0 million in 1Q15.

PennyMac (PFSI) missed estimates due to higher servicing expenses related to Ginnie Mae buyout loans and higher claims processing activity. Gain-on-sale revenue rose to $84.0 million from $75.4 million in 1Q. Total production volume was up to $13.0 billion from $8.9 billion in 1Q, while originations for PFSI's book were $9.5 billion, up from $6.0 billion. It looks like the gain-on-sale margin was 89 bps. The servicing portfolio increased to $136.2 billion UPB from $115.2 billion UPB in 1Q.

Redwood Trust (RWT) experienced lower gain-on-sale income and higher expenses although operating earnings increased from $0.25 last quarter. Book value declined. Residential loan acquisitions totaled $2.8 billion during the quarter (conforming loan acquisitions of $1.44 billion were up from $1.37 billion in 1Q and Redwood also originated $1.4 billion of jumbo loans, up from $1.1 billion in 1Q.) RWT completed two residential securitizations during the quarter for $712 million and sold $708 million of jumbo loans. The company reduced its residential mortgage origination guidance to a range of $11.5 billion to $14 billion of originations in 2015, from $15 billion previously. Lastly commercial mortgage volume came in at $259 million from $100 million in 1Q. Gain-on-sale margins rose to 1.16%, from break-even in 1Q.

Capital markets folks know that RWT entered into a risk-sharing deal with Freddie Mac in July. RWT will take 1% of first-loss credit risk on up to $1 billion of new conforming product created during 3Q15. The company had already done a similar deal with Fannie Mae.

Essent (ESNT) reported GAAP $0.41 and operating EPS of $0.40. Of great interest was premiums & new insurance written (NIW). Flow NIW of $7.2 billion was up from $5.3 billion in 1Q. KBW estimated the company's market share was about flat QOQ at 12%, which remains down from peak levels of around 14%. The single premium percentage remained flat at around 24%. The provision for losses and LAE came in at $2.3 million, up from $2.0 million in 1Q; the loss ratio came in at 3.0% and the loss reserve rose to $11.9m from $10.1m.

Speaking of mortgage insurance, MGIC has reported its June Operating statistics indicating that new insurance written has grown from $3.7 billion in May to $4.5 billion in June. New notices declined 16 percent YoY but increased 11.2 percent MoM. The cure ratio declined to 88.4 percent from 101.1 percent in May and the ending delinquent inventory was down 22.3 percent YoY. Paid claims increased 9 percent MoM while net rescissions and denials increased to 64 from 47 in May. Click here for the full KBW report.

MGIC's underwriting guide sections have been updated expanding underwriting requirements for MGIC Non-Go! loans (loans that are not processed through an Agency AUS or that do not meet MGIC Go! Underwriting Requirements). Some of its updates include elimination requirements that applied when a borrower retains an existing primary residence. Employment income has been expanded to allow use of IRS Wage and Income Transcripts in lieu of W-2s. Grants are expanded to include Federal Home Loan Banks as an eligible provider.

A Genworth Mortgage Insurance report indicated that a majority of lending executives surveyed believe many eligible borrowers do not feel that can realistically buy a home. Other highlights of the report suggest that 65 percent of respondents believe it will take anywhere from one to three years for the FHA to meet its required capital levels due to having reduced their premiums. Whereas 53 percent of senior executive respondents believe their business will be impacted by the Private Mortgage Insurance Eligibility Requirements (PMIERS) and 38 percent of non-senior executives expressed the same concern. Senior executives also showed more concern than the rest of the industry in regards to the anticipated revisions to Lender Paid Mortgage Insurance premium plans.

Arch MI announced its EZ Decisioning underwriting requirements now align with Fannie Mae in regard to changes recently announced in Selling Guide 2015-07. These changes include: Conversion of Principal Residence, Stocks, Bonds, and Mutual Funds, Unreimbursed Employee Business Expenses, Tip Income, Use of IRS W-2 Transcripts in Lieu of W-2s, Permit Prepayment Penalties on Subordinate Liens, and Optional Data Fields on Verification of Employment (VOE) Form 1005 and 1005(S). Arch MI's Guidelines Summary and Underwriting Manual will reflect these and any subsequent changes to its underwriting policy in the next update.

Flipping over to interest rates, volatility has picked up a little bit - primarily driven by news from overseas. U.S. Treasuries rallied sharply after the Chinese government announced that it would allow market forces to help determine the yuan's value in foreign exchange (FX) markets. The move may have been prompted by data released over the weekend, showing that exports declined 8.3% in July. A cheaper local currency will make Chinese exports more competitive on global markets at the expense of the country's trading partners. If the yuan is allowed to float more freely many of its East Asian neighbors' currencies will fall - which they did yesterday. (Certainly the news here in the U.S. - Nonfarm productivity, unit labor costs, and the results of the 3-year note auction - paled in comparison.)

Today we've had the MBA's Mortgage Index (about flat), and can look forward to June JOLTS - Job Openings and a $24 billion 10-year note auction. But rates are lower. The 10-year settled Tuesday at 2.14% and this morning we're at 2.11% with agency MBS prices better slightly after the huge rally yesterday - driven by events in China.

Jobs and Announcements

In forward-looking job news, Synergy One Wholesale, a national wholesale lender offering Conventional, Government, Jumbo, Non-Prime and Non QM programs, is seeking Account Executives that have a proven track record of success and are currently working as an AE for a wholesale lender in any the following states: AL, AZ, CA, CO, CT, DC, FL, GA,  ID, IL, IN, IA, ME, MD, MI, MN, MT, NH, NC, NJ, OH, OR, PA, RI,  SC, TX, UT, VA, WA, WY. Wholesale AE candidates must demonstrate a successful history of building wholesale production in their area and must have an established broker/client base. AE candidates should be highly driven and self-motivated individuals, who are currently working as an Account Executive for a wholesale lender. Candidate should have at least 2+ years of experience in wholesale lending sales and a working knowledge of Conventional, FHA, and VA programs. Interested candidates should email their resume to Ron Krueger, Division President.

And Bluepoint Mortgage, a dynamic and growing Wholesale Lender, is looking to expand its footprint in the West. Headquartered in Costa Mesa, CA, "The Bluepoint executive team is dedicated to earning business through a consistent and exceptional customer service experience". Management is searching for talented Wholesale Account Executives/Sales Managers in California, Arizona, Utah, Oregon, Texas and Colorado. We offer an aggressive compensation plan for the right candidates. If you are interested in joining a progressive and growth oriented firm please contact Phil Garcia (714-824-8085).   

On the correspondent side, AmeriHome Correspondent continues to grow and recently cracked the top 10 correspondent lenders after only 16 months in operation. "To support its clients' growth, management is pleased to announce Kimberly Donovan joining the team as an Account Executive for the North Central Region (including MT, WY, CO, ND, SD, NE, KS, IA, and MO). Kimberly brings 21 years of hands on experience in mortgage sales and operations to AmeriHome's team of seasoned and talented mortgage professionals."

Continuing on with the "people on the move" theme, Homeside Financial, "a fast growing mortgage bank headquartered outside of Washington D.C.," has brought on Jared Ward  to oversee national talent acquisition and strategic growth for the company. Homeside Co-Founder & Managing Partner, Dan Snyder had this to say about the recent hire, "Jared is considered one of the top recruiters in the industry and has a tremendous background on the strategic relationship side of the business as well. We see him as the catalyst for growth as we expand nationally in our pursuit to be a top 25 lender nationally."