What does the CFPB think of residential lenders? One indication might be the videos of borrower horror stories posted on its website. I, for one, would sure like to see some car loan stories - having the CFPB continue to suggest that the public shouldn't trust mortgage lenders, while we all wait for the next enforcement action to figure out rules, is misleading and entirely counter-productive to the entire industry.

SoFi, a San Francisco-based "market place" lender, received some very favorable press this week from Forbes Magazine and the Wall Street Journal. It is nice to see a company that has a growing mortgage division receive that kind of news, although critics are left scratching their heads about companies where "The funding would give SoFi a $4 billion valuation, a sum good enough to land it in the top 30 U.S. banks (by market cap)."

Big or small, regardless of market cap, lenders have to figure out a plan for vendor management. Yes, with the move toward greater, more finely tuned expertise in lending and the effort to lower fixed costs, lenders' use of vendors has been on the rise for quite some time. Here's an article discussing managing all those moving parts.

And did someone say that foreclosures are heading down? Yes they are, on a nationwide basis. But New Jersey is making a name for itself by bucking the trend, and foreclosure starts are actually increasing. Suggested reasons vary. The state took a hit with job losses, but originators say what was worse were the household income reductions. Property taxes are huge, and NJ also had a state moratorium put in on foreclosures without a solid plan to assist those impacted. Many say that NJ's pension outlays are relatively large, and the state has seen a loss of military contractor companies, pharmaceuticals, and ATT and Bell Labs.

Speaking of trends in the economy, Existing Homes Sales rose to their highest level since February 2007. So what? We're having an entirely different discussion about housing then we were having 3 years ago, in spite of New Jersey's foreclosure starts noted above. Existing Home Sales rose to 5.59 million in July from 5.48 million. The median home price rose 5.6% YOY to $234,000. This puts the median house price to median income ratio around 4.3x, which is higher than historical averages. Distressed sales fell 2 percentage points year over year to 7%. First time homebuyers fell slightly to 28% from 29% a year ago. Investor purchases fell from 16% to 13% and days on market fell from 48 to 42. Unsold inventory is about 4.9 months' worth, which indicates a tight market. 

Through July, housing starts are up 11.3% YTD, an increase of 65,900 units. Single-family activity is up 11.2% or 42,200 units, while multifamily starts are up 11.6% or 23,600 units. As for permits, while up 14.2% YTD or 85,800 units, single-family permits are up just 8.8% or 33,200 units, less than the rise in SF starts, while multifamily permits are up 22.8% or 52,600 units, substantially more than MF starts.

The solid trend goes back a ways. When Zelman and Associates published their fourth quarter 2014 banking survey, which encompasses 10% of acquisition, development and constructions (AD&C) loans outstanding, respondents raised their forecast for AD&C loan growth for 2015 and gains were seen in the non-residential lending sector as the availability index reached 62.2. Availability for multi-family construction has moderated and smaller banks are increasing their AD&C lending growth. Expected 4Q14 AD&C loan balances are to be 14% higher than a year earlier, indicating the largest such growth since 2006.

And even in May Zelman & Associates published its May Originator Survey indicating that purchase volume remains high despite excessive documentation requirements, especially for applicants with unique income or asset profiles, which remains a hurdle. Lenders' purchase applications rose 10 percent YoY in May, which is a 13 percent gain from the previous month and the credit quality index declined for the sixth consecutive month to 64.6, which is the lowest level since 2012 due to first-time homebuyers entering the market. The underwriting stringency index dropped to 65.3, which is the lowest level since its inception five years ago and 39 percent of lenders expect further easing over the next year regarding DTI and LTV tolerances, while 61 percent expect no change. Lenders also ranked entry-level borrowers' mortgage knowledge at 42.9 on a 0-100 scale, implying that there is a negative perception and weak understanding of credit availability. To learn more about its Originator Survey, contact Ivy.

While we're on May and talking about trends, Zillow recently found that homes near military bases are more valuable than a median U.S. home, but these homes may not be that affordable on an average military personnel's salary. Members of the military living off base are given a basic allowance for housing but it does not provide an equal standard of living from base-to-base. On average, military personnel pay about 31.5 percent of their income on a mortgage for a home near a military base, which is double the national average of 15 percent. Marines allocate the largest share of their income towards a mortgage at 36 percent followed by the Navy at 34.6 percent due to the base camps close proximity to water. For those choosing to rent due to its flexibility, military members pay 41.6 percent of their income on rent, with slight variations depending on the specific branch, as marine and navy renters allocate 43.2 percent of their income towards rent. Location also places a significant role in affordability, for example, those stationed at San Diego's military facilities living off base pay 65.5 percent of their income towards a mortgage and 59.6 percent towards rent. In Fort Hood, Texas, military members pay 15.1 percent of their income towards a mortgage and allocate 29.1 percent of their income towards rent.

According to a report from Campbell/Inside Mortgage Finance, there was a strong market for non-distressed properties in June as the sales-to-list price ratio reached 98.5 percent last month, based upon a three-month moving average, which is the highest level in more than five years. This is in comparison to the sales-to-list price ratio topping out at 97.8 percent over the past two years. The average time on the market for non-distressed properties was 8.5 weeks in June, dropping from an average of 11.1 weeks seen in February. The low inventory and high demand from current homeowners and first time homebuyers have contributed to the elevated sales-to-list price ratio. These two groups combined accounted for 85.9 percent of home purchases in June, up from 82.8 percent a year earlier. First time homebuyers accounted for 38.3 percent of home purchases last month as well, a level not seen since 2010.

Even back in March the national rental vacancy rate has dropped from 8.2 percent at the end of 2013, to 7 percent at the end of 2014, the lowest level since 1993 when it was only 6.9 percent. Even though rent prices are increasing, vacancy rates are dropping, making it difficult to find a place to live. In Zillow's analysis, fourth quarter 2014 rental vacancy data was examined from the 75 largest metro areas in the U.S. The study identified the West coast as having the lowest vacancy rate than other part of the country with an average rate of 4.8 percent, whereas the South has the highest rental vacancy rate, particularly in Texas. The state with greatest amount of rental vacancy as a whole is Florida, as every metro area studied is at or above the national average.

We're in the dog days of summer, and rates have been drifting down. But what has been happening in capital markets? I turned to Dan "Associate Director, Secondary and Capital Markets for the MBA" McPheeters, who responded with, "We have been rather busy this summer and look forward to touching base with everyone during Annual. One issue that has heated up recently is our opposition to FHFA's proposed FHLB membership rule. In the wake of the comment letter we submitted to FHFA in January, our mortgage REIT Council has been leading a follow-up effort to ensure that FHLB membership regulations take into account the needs of today's housing finance market.

"We have also remained active in working with FINRA to ensure that any changes to the margin rule take into account the unique elements of the mortgage lending market, both residential and multifamily. A group of MBA staff met with FINRA leadership over the summer, and we plan to be fully engaged through the remainder of the rulemaking process. As one of our top priorities, we continue to urge FHFA to direct the GSEs to begin programs to increase the amount of first-loss risk that is sold to private investors prior to being acquired by a GSE. In lieu of Congress enacted comprehensive GSE reform, we believe that this step is necessary to provide private capital support to the housing finance system and protect the taxpayer.

"Finally, the MBA has been deeply involved in facilitating industry dialogue on the Common Securitization Platform and single security development. In particular, we have helped facilitate conversations concerning implementation requirements and are pleased to serve on the recently-announced industry advisory group. We look forward to the GSEs' implementation plan due out this fall and the important guidance that it can provide through key milestone."

With the 10 year bond trading below 2.10% we're at the same place we were in late April. Lock desks are being hit up for renegotiations, of course, and LOs are polling their floating borrowers about locking in or refinancing. Certainly the steam is coming out of the market for a September tightening as global equities sank on falling commodity prices and Asian growth worries. Scheduled data out today? Zip. A summer Friday! The 10-year closed Thursday at 2.08% and this morning we're at pretty much unchanged in the fixed income markets.

Jobs and Announcements

For something more constructive, Financial Partners Credit Union is a seeking a highly experienced Mortgage Loan Originator in the San Diego market area "to serve our three branch locations and the community. Experience with FNMA, FHA and VA a must. In addition, we are seeking an experienced Director or Vice President of Mortgage Operations for our Downey operations center. This person will provide timely and strategic direction to areas within the Real Estate Lending Department.  Since 1937, FPCU has established itself as a financially strong mortgage lending resource to members, realtors and the communities it serves. A full product suite that includes FNMA, FHA, VA and Portfolio Conforming & Jumbo (to $4MM), HELOCs and 2nds are available to offer to new and established members nationwide. An aggressive compensation plan and exceptional benefits are offered to successful candidates. Contact Raevon Hurt for more information - become a partner today."

And congrats to Valuation Partners who was recently named as one of the top valuation companies in the USA by DS News. The June edition of DS News highlighted several outstanding national valuation providers "and being privately held, Valuation Partners was a rare inclusion. Jan Buchele, the SVP of Residential Services, stated 'VP has excelled for over 30 years in large part due to being owned and managed by appraisers. Reputation for the quality of Valuation Partners products and services is 'legendary' and endorsed throughout the industry.' Also, Valuation Partners announced a new process to expedite appraisals for purchase transactions. Entitled the Purchase Appraisal Process, this proprietary development addresses the industry's growing demand for fast, accurate and reliable valuations. 'We focus on building trust with our clients,' according to Mark Lyons, SVP of Corporate Sales Development. 'Our company has a close affinity to client needs whether they are independent mortgage bankers, credit unions, or traditional banks. Our systematic approach minimizes friction points and improves communication that ultimately provides quicker turn times and a better customer experience.' For further information, contact Mark Lyons."

Wholesaler United Wholesale Mortgage has promoted Melinda Wilner to the newly created role of Chief Operating Officer (COO) from her job as Executive Vice President of Underwriting.