Let's start with something non-mortgage related but that may be of interest to some. Who doesn't go faster than the posted speed limit on a freeway? Certainly not Sammy "I Can't Drive 55" Hagar. Nor Google. Google's driverless cars will exceed legal speed limits so they can keep up with other drivers. Google's self-driving cars will be designed to exceed maximum speed limits, in a move to "improve safety." The lead engineer for the project has revealed the vehicles will go 10mph (16km) faster than the speed limit. I am not clever enough to think of a correlation in residential lending and the CFPB using enforcement actions to govern instead of published rules...

In lender-specific news Bose George with KBW observed that LoanDepot filed an S-1 registration statement. The company was the 11th largest mortgage lender during the first half of 2015 and the filings showed that "the company remained solidly profitably in 1H15 with a net profit margin of 14%. Quicken Loans, which disclosed its financials in a 144A debt prospectus earlier this year, also showed very strong profitability through 2014. These companies' numbers suggest that it remains possible for mortgage originators to generate attractive returns in a tepid mortgage market."

Bose goes on. "LoanDepot is a technology-enabled lender that originated $14.3 billion of mortgages in 1H15. Fifty-nine percent of LoanDepot's product in 1H15 was done through the GSEs while 29% was through FHA/VA. The company is primarily a retail originator; in 1H15 41% of its volume came from its direct-to-consumer channel, 48% through its distributed retail channel, and 10% through its wholesale channel. The company generated a gain-on-sale margin of 2.98% in 1H15 and a 1.47% gain-on-sale margin for full year 2014. The company's net profit margin was 14% in 1H15 and 4% in 2014. The company generated an ROE of 69.7% in 1H15 and 18.0% in 2014.

"Quicken originated $58.9 billion of mortgages in 2014. It had a gross gain-on-sale margin of 3.69% and a net profit margin of 20.6%. The company generated an ROE of 18.8% in 2014. Sixty-seven percent of Quicken's production was GSE, while 26% was FHA/VA."

KBW's report sums things up with, "Both Quicken Loans and LoanDepot are relatively new companies. Their market shares were 2% and 0% in 2010 vs. 5% and 2% in 1H15, respectively. We believe the growth and profitability of these companies suggest that the effective use of technology can meaningfully improve mortgage industry profitability, which in turn could improve the current negative investor sentiment toward the sector."

Continuing with the "sector" theme, banks continued to be winnowed out. Okay, that is not quite the term since bank closings are down dramatically versus prior years. But bank M&A rolls onward. Just this morning we learned that New York Community Bancorp Inc., the parent company for New York Community Bank and New York Commercial Bank, and Astoria Financial Corp., the parent company for Astoria Bank, announced the signing of a definitive agreement under which the two companies will combine in a strategic merger. The transaction is valued at approximately $2.0 billion.

In just the last week it was announced that multi-bank holding company Heartland Financial ($6.7B, IA) will acquire Centennial Bank ($722mm, CO) for about $84mm in cash (20%) and stock (80%). Alerus Financial ($1.6B, ND) will acquire retirement plan provider Alliance Benefit Group North Central States Inc. (Located in Kansas, Alliance provides recordkeeping and administration for 900 retirement plans, 75,000 participants and $6B in plan assets.) In Arkansas Anstaff Bank ($430mm) will acquire Twin Lakes Community Bank ($109mm). In Pennsylvania Beneficial Bank ($4.7B) will acquire Conestoga Bank ($719mm) for 1.6x tangible book value but not to exceed $105mm.

Southern Bank and Trust Co ($2.2B, NC) will acquire Heritage Bank ($324mm, VA) for about 1.45x tangible book (100% cash). Here in Michigan Level One Bank ($905mm) will acquire Bank of Michigan ($108mm) for $17 per share in cash. In Joisey Regal Bank ($373mm) will acquire Community First Bank ($99mm) for $9.7mm in cash (10%) and stock (90%). In Maryland Revere Bank ($749mm) will acquire BlueRidge Bank ($205mm) for about $20mm in stock. Bank of the Ozarks ($8.7B, AR) will acquire Community & Southern Bank ($3.8B, GA) for just under $800mm or about 2.0x tangible book. Renasant Bank ($5.9B, MS) will acquire KeyWorth Bank ($389mm, GA) for about $58.7mmm in stock.

Have there been any changes recently to lender and investor fees & price adjustments? You bet there have. In no particular order, but to give you a sense of the trends...

Sun West Mortgage provided clarification on how the 7-day waiting period for reverse mortgage applications for properties in the state of California should be implemented.  A lender shall NOT accept a final and complete reverse mortgage application and assess any fees until 7 calendar days from the date of loan counseling. In other words, while an initial application may be taken within 7 days of the counseling completion date, the closing may not happen until 7 calendar days after the counseling has been completed.

M&T Bank's recent product bulletin referenced USDA's announcement that the Upfront Guarantee Fee will increase from 2.0% to 2.75% for loans approved by the USDA on or after October 1st. The USDA regional turn times are currently running 10 to 14 business days. These turn times will only get longer as the October 1st deadline approaches. Lenders are reminded to submit complete packages to the USDA for their approval, incomplete packages slow down the process and extend turn times.

Recent and upcoming changes for LDWholesale clients include information regarding state specific disclosures, private transfer fee policy, and ARM qualifying rate. Click here to view LDWholesale's "What's New" weekly newsletter.

What about those USDA loans? Lenders are reminding folk of the USDA upfront guarantee fee increase, effective for all new Conditional Commitments issued on or after October 1, 2015. USDA will be increasing the Upfront Guarantee Fee to 2.75% from 2.50%. The annual fee is unchanged and will remain at .50%.

Finance of America Mortgage addressed recent USDA changes on guaranteed loans approved/CC issued beginning October 1 which are subject to a 2.75 percent upfront guarantee fee (2.00 percent prior) and a 0.50 percent annual fee (unchanged)  as well as the temporary lapse of funding procedures and impact for lenders and borrowers. As per usual, Conditional Commitments will be issued "subject to the availability of commitment authority". As of October 1, 2015, GUS applications in a "Final Submission" status, with an upfront guarantee fee of 2 percent that were not issued a conditional commitment by RD prior to the close of business on September 30, 2015 will be subject to a conversion process.

Effective as of September 15th, Pinnacle Capital Mortgage adjusted its Lender Fees as follows: $995 Admin Fee for all states with the exception of AZ, NM, CO, & UT with admin fee of $895. Streamlines & IRRRLs refinances will require a $495 Admin Fee.

The RD fee increase affected FCMKC procedures as of October 1^st. Click the link for specific instructions regarding Rural Development submissions.

Back in mid-September PennyMac implemented updates to the 'Govt LLPAs' tab on all rate sheets.  Click the link to view the sections specifically updated.

Beginning October 5 MB Financial Bank's Mortgage Division increased the Lender Administration Fee by $45. This fee increase applies to any Loan Estimate that is disclosed by MB for mortgage loan applications taken on or after October 3 and is applicable to all loan types where MB currently charges the admin fee. 

Per Mountain West Wholesale requirements, in order for a borrower to pay an appraisal fee, the Notice of Intent to Proceed date must be provided at the time of appraisal order. In addition, it is MWF's policy, as the Lender, to issue any and all versions of the Borrower's Closing Disclosure required by TRID.  The Settlement Agent will be responsible for issuing accurate Seller's version and any other Settlement Statements required by TRID and/or their own agency, state and federal governance.

Wells Fargo Funding is updating its Non-Conforming policy, effective November 16^th, to include the requirements for the use of premium financing. The funds derived from premium pricing, are allowed only to pay the borrower's typical Closing costs and/or prepaid expenses. CFIRC may not be used to pay any portion of the borrower's down payment, personal debts (e.g., revolving debt), collection accounts, judgments, escrow shortages, or any other item that is not considered a typical prepaid item or typical closing cost paid by the borrower as listed above. Clients should read its News Flash for full details.

Moving on to rates, using the yield on the 10-year T-note as a proxy for "interest rates", its yield has ranged between 2.00-2.50% for most of 2015. We're still there, although most of the e-mails I received yesterday were from lenders raising their rates after the Federal Open Market Committee statement was released. The FOMC statement said that the committee will determine "whether it will be appropriate to raise the target range at its next meeting." That means December. But the FOMC left the Fed funds target unchanged at 0-0.25%, as was almost unanimously expected, and Yellen & Crew said that the economy continued to expand at a "moderate pace". This shouldn't be stunning news to anyone. But the Fed went out of its way, relative to the September statement, to put a December hike back on the table.

For never-ending excitement today we've already had Initial Jobless Claims (+1k to 260k, continuing claims -37k) and Q3 GDP (+1.5% vs. +3.9% for the 2^nd quarter). Ahead of us will be September Pending Home Sales and a $29 billion 7-year note auction. We closed the 10-year at 2.09% Wednesday and we're at 2.12% this morning; agency MBS prices are worse nearly .125.

Jobs and Announcements

Indecomm, a leading provider of mortgage technology, training, and outsourcing services, is seeking experienced underwriters. The successful candidate will provide a high level of customer service, communicating well with loan officers, brokers, and processors, and have the ability to review regulatory compliance with disclosures, validate data used by an automated underwriting system to decision loans, and perform a comprehensive review of the appraisal report. Other responsibilities include determining if the loan meets underwriting guidelines, product guidelines, investor requirements, and eligibility requirements. Candidates can be located in St. Paul, MN, Charlotte, NC, or remote. The ideal candidate should have 5 years of continuous active underwriting experience. An active NMLS license is preferred. Interested candidates should send their resume to HR Manager Candy Mechels.

In wholesale news New Penn Financial is hiring talented, experienced Wholesale Account Executives immediately in Massachusetts, New York, and Pittsburgh, PA. New Penn "is a dynamic and rapidly growing mortgage lender with over 1,600 employees nationwide. Founded in 2008 and licensed in 48 states, New Penn Financial is a part of the Shellpoint Partners family of companies. Its reputation has grown substantially under the guidance of a management team with years of experience in the mortgage industry. New Penn Financial has been recognized in the top 20 Third Party Originations Lenders and was recently voted as being a great mortgage lender to work for by sales professionals. To apply, please submit confidential resumes to Senior Corporate Recruiter Aubrie Cusumano.

On the flip side Deutsche Bank announced that it would slash as many as 35,000 jobs over the next two years through internal cuts and sale of businesses in order to simplify and overhaul the company. And Bank of America also announced some cuts in Charlotte as its bad loan load diminishes. (Anyone displaced can post their resume for free at www.LenderNews.com.)