The MBA sent a letter to the House Committee on Ways and Means regarding its recently released tax reform proposal. Given the tax proposal, the MBA reports (using its analysis of 2016 HMDA data) that 7% of first lien home purchase mortgage balances originated in the US in 2016 exceeded $500,000. ($500,000 is the proposed maximum balance on which mortgage interest would be deductible in the House Republican proposal.) The Senate's version, on the other hand, is expected to keep the $1 million mortgage cap unchanged.

News From Nationstar, Mr. Cooper and a Start-Up

Hundreds upon hundreds of residential lenders are trying to buy other lenders. Would they be interested in buying Nationstar? Who could buy a company that size? Plenty of big venture capital and private equity funds already own lenders. The big banks are probably set on the origination side - if they want more servicing they can crank up their correspondent divisions. Bloomberg reported that Nationstar was exploring a potential sale of the entire company and that management plans to call for initial bids from potential buyers this month.

This follows similar reports earlier in the month on the Betaville investment website. Compass Point Research & Trading observed, "We expect the most likely potential buyers/bidders for NSM would be another private equity firm or a private non-bank mortgage servicer. On valuation, we expect NSM could potentially see up to $23.00 in a takeout (12.0x consensus FY18 EPS of $1.91), which is the upside valuation scenario in our recent update. While a buyer could potentially extract better economics from NSM's Xome segment, the remaining businesses would likely get a lower multiple, especially given differences in NSM's accounting for its servicing profitability, along with the refi-heavy origination segment."

Nationstar recently reported income & performance for the 3rd quarter. NSM reported adjusted pretax origination earnings of $45M, down -18% from $56M in 2Q17. Funded volume increased +19.9% to $5.1B from $4.2B last quarter, while purchase volume accounted for 36% of total funded volume (vs. 29% in 2Q17). Gain on sale margin (based on lock volume) dropped to ~2.72% vs. 3.40% in 2Q17. The QOQ difference is driven by the change in mix toward the lower margin correspondent channel.

Out in San Francisco, two-year old startup RealKey launched its mortgage and real estate automation software. It's goal? Like every other lender out there, to accelerate loan processing and drastically shorten property transaction closing times. RealKey's founder and CEO is Christopher Hussain, and it claims to cut processing time by 66 percent, down to about 10 days, with its new "all-in-one" lending solution. RealKey's platform is that it allows the multiple parties involved in a mortgage application process to collaborate on a single application in real time, while automation software assists by pointing out requirements and helping fill out tedious paperwork.

State News From Maryland and Delaware

Making home loans, and servicing them, is tough enough in one state. Sometimes expanding to other states multiplies the compliance and legal costs dramatically if the lending laws are different.

LendEDU recently published a new financial report, dubbed A Look at the Nation's Credit Scores by State, analyzing credit scores of each state in the U.S. The report gauges which states are and are not performing well financially. Does your state have an above-average credit score? Does your state have sub-prime credit?

A while back J. Steven Lovejoy, Esq. with Shumaker Williams, P.C. wrote to me pointing out that, "Some states have started enacting different consumer protection provisions in anticipation that the federal government will cut back on regulation. Maryland, however, enacted two measures designed to decrease the burden of state law provisions. Effective July 1, 2017, mortgage lender licensees who comply with federal TRID disclosure regulations will not have to provide a separate "Financing Agreement" (which is like a lock-in agreement) and "commitment" pursuant to Maryland state law: Maryland Session Laws Chapter 484 (2017) and MD Comm. Law Article § 12-125. Also, the Maryland General Assembly, effective October 1, 2017, eliminated the filing prerequisite that a mortgage or Deed of Trust contain a written certification that the instrument was prepared by an attorney or a party to the deed. So, it's not all bad news on the state-law front."

Maryland amended provisions to align state mortgage industry terminology with federal terminology. Provisions were also clarified impacting MLOs. The objective of the legislation was to simplify compliance. Accordingly, both "average prime offer rate" and "higher-priced mortgage loan" were defined. As for the provisions amending MLO requirements to promote clarity, the most notable changes are Continued Education (CE): Previously, due to gaps in the definitions, non-related topics may have satisfied the CE requirements. Now requirements must be related to mortgage lending, origination and standards.

The Duty of Care standard has been relaxed to include "a form that is substantially like the form prescribed." Changes to applications, specifically completed applications, which have the attendant required fees posted will now have to be approved or denied within 60 days upon receipt. Denials will require that an itemization of steps needed to remedy any incompletions be provided to the applicant. There are several exemptions noted as well.

The most notable amendment introduced impacts social media advertising when an MLO advertises and pertinent information such as employer and NMLSR number is not required.

Delaware has been busy... It amended its provisions relating to the authorization to satisfy a mortgage, which will now allow a retired Delaware attorney to satisfy a mortgage that the attorney paid off while in practice. The amendment expands the scope of Section 2120 to include partial releases of a mortgage where a Delaware attorney or retired attorney made a partial payment to release a portion of the mortgaged property. The amendment further provides that, upon receipt of an affidavit and request by the attorney or retired attorney fully or partially paying such debt, the recorder of deeds, or a duly appointed deputy, shall be authorized to cause said mortgage to be satisfied or the relevant portion of the pledged property to be released from said mortgage.

The amendment also provides forms to use for a mortgage satisfaction affidavit and a mortgage partial release affidavit that an attorney or retired attorney should use when certifying a mortgage payoff or partial payoff.

It has enacted Senate Bill No. 32 concerning the requirements for the recording of a mortgagee's change of address for purposes of notice. In part, the amendment adds Section 2124 to Chapter 21 of Title 25 of the Delaware Code which outlines the filing of a Statement of Mortgagee Address Change. Senate Bill No. 32 also amends Section 2111 which includes instructions for recorders on indexing Statements of Mortgagee Change of Address.

And it has extended the Delaware Automatic Residential Mortgage Foreclosure Mediation Program. The program will continue to run until January 18, 2020. The Foreclosure mediation program was designed to find solutions between the borrower and the lender when foreclosure is looming. Presently, the success of reaching a non-foreclosure resolution for those who participate is at a resounding 63.21%.

Success in the program can come in two different forms. First, the borrower may seek and find a way to remain in his or her home. This can be achieved by: (1) finding an agreeable loan terms modification; (2) creating a loan repayment plan that allows for both parties to meet their financial objectives; or (3) entering into a forbearance agreement. Second, as an alternative to staying in the home the borrower may find that voluntarily exiting the home may be more beneficial for both parties. This can be achieved by either conducting a lender-approved short sale or transferring a deed in lieu to the lender in exchange for debt cancellation.

Capital Markets

Remember when the bond market traded off oil prices? Some attention has shifted that way due to problems in Saudi Arabia, and oil prices moving higher. Our Federal Reserve wanted some inflation, but is it going to come with pain when you fill up your gas tank?

Once again volatility in the bond market, and therefore interest rates, has quieted down. Longer-dated U.S. Treasuries and agency MBS prices ended Monday "in the green" with a small price rally.  The 10-yr yield returned near its 200-day moving average of 2.31% while the 2s10s spread compressed to a fresh ten-year low of 70 bps after ending last week at 73 bps. Yesterday both 5-year T-notes and agency MBS prices improved about .125.

For news today, there isn't much to move the market. The NFIB Small Business Optimism Index (Oct) came out, Redbook weekly chain store sales will be released, as will the JOLTS job openings for September, and we have a $24 billion 3-year note Treasury auction. In the early going the 10-year is yielding 2.32% and agency MBS prices are nearly unchanged versus Monday's close.

Jobs, Products, and Promotions

Republic Bank & Trust Company in Louisville, KY has hired Jason Howze as National Sales Manager for its Mortgage Division. Jason will tap into his 18 years of mortgage experience to lead the retail expansion of its core markets of Louisville, KY, Nashville, TN and Tampa, FL.  In addition, Jason will be responsible for expanding Republic's Consumer Direct channel nationwide. "We are currently hiring top loan originators in these markets for both channels. Republic offers a complete suite of products from agency to portfolio, including HELOCs, Construction, Bridge, Lot, Land, Real Estate Secured, Doctor programs and other specialty products that allow our originators to best serve their clients. Professional originators looking for the stability and staying power of one of the best performing banks in the nation combined with a focus on external origination should contact Jason at 502-560-8647 or apply online here.  At Republic, It's Just Easier Here. Republic Bank is an EOE Employer-Minorities/Females/Veterans/Individuals with Disabilities/Sexual Orientation/Gender Identity."

"Emerging Bankers can now see Planet Home Lending's great pricing in LoanSifter by Optimal Blue. Even non-customers can view Planet's current Jumbo, Fannie Mae, FHA, and VA offerings. Lenders in all 50 states can take advantage of Planet's user-friendly portal for registering loans and processing loan files. Contact Regional Sales Managers Greg Schatz (914-715-8998) or Tim Gibbens (949-596-0921) to tap into better pricing today."

Do you follow Anthony Hsieh, CEO and Chairman of loanDepot, on LinkedIn? As one of the most vocal mortgage industry leaders, Hsieh didn't hesitate to discuss one of the most highly-debated topics in the space: "Will technology replace loan officers?" Digital disruption is real but that doesn't affect this CEO's plans to come out on top with Retail loan officers as a main contributing factor to loanDepot's continued success. "Technology does not replace relationships, it enhances them. Just ask Amazon," commented Hsieh. "Being defensive is not a strategy for the very real digital age that is upon us." Read more about loanDepot's strategy here. Loan officers that are ready to face the future with industry best, proprietary, technology should contact Cassidy O'Sullivan. Find out firsthand how they are making mortgages cool again.

A group of more than 160 loan officers, managers, executives, and other company representatives recently returned from Academy Mortgage's Service Expedition to South Africa. Given as a unique reward for extraordinary performance, Academy's Service Expedition is an important and differentiating component of the company's heavily service-oriented culture. On this year's trip, the Expeditioners gave two days of service to benefit The Makwetse School, (located near Kruger National Park) and is filled to capacity with more than 700 students. Improving the school's infrastructure was Academy's primary focus, and company volunteers assisted with the construction of a school kitchen, built key-hole gardens, painted classrooms, and refurbished over 400 student desks. All the projects, including the construction of the kitchen, a library, and future construction of a new playground, were funded by Academy. Click here to watch a video of Academy's South Africa Service Expedition. For more information on Academy's service initiatives, both at home and abroad, contact National Recruiting Manager John Owens.

"A market leader in delivering a range of technology-driven solutions for the mortgage industry, Informative Research welcomes Bryan Saxen as their new Senior Account Executive, operating in Northern California and the Western region. Before IR, Saxen worked at CoreLogic for over two decades with 13 years as an Account Executive. Now with the addition of Saxen, Informative Research continues to focus on its aggressive expansion to offer their progressive solutions and reliable service to a wider lending base. 'I was overjoyed to join the IR team and work with such amazing people,' commented Saxen. 'Informative Research is bringing a lot to the table with their Verification Bundle and new automated solutions. It's exciting to be a part of and see how it's already starting to positively affect our clients and the industry on a grand scale.'"

Congrats to Robert J. (Bob) Smith who has accepted AmeriSave Mortgage's offer of the position of President, replacing Ed Abufaris who recently announced he was leaving the company. Bob joined AmeriSave on November 1st and will be appointed President following receipt of necessary regulatory approvals. AmeriSave announced in August 2015 it was opening an operations center in Louisville, Kentucky to absorb employees of Discover Home Loans, which has exited the marketplace. Smith was heavily involved in the transaction relating to Discover Home Loans' Louisville operations.