The BLS reports 5 of the 10 fastest growing jobs pay less than $25k per year. I wonder what percentage of real estate agents earn that? Realtors have a huge influence of a borrower's lender decision, according to a Freddie Mac survey. The biggest factors are ease of doing business, reputation, and the strength of their relationship with the agent. "Eighty-four percent of real estate professionals have a select group of lenders to which they generally refer their clients. Of these, 73 percent have 1-3 lenders in their network and 24 percent work with 4-6 lenders. More than three-quarters (76 percent) say their clients always or often use their recommended lender referrals. This figure climbs to 87 percent among those who sell more than 20 properties per year."

In terms of legal and compliance services for lenders, Michael Celenza with Buckley Advisors writes, "We see potential risk is hiding in plain sight. Segregation of Duties (SOD) has been around for a long time but believe it or not, it's not a regulation, it's a 'Best Practice' and is a primary question found in the Interagency Fair Lending Examination manual. Mortgage Bankers have used this for years but it's less common with Community Banks and Credit Unions in the residential mortgage space, they ask their staff to wear multiple hats, not realizing the potential risk.  An example of this is having Loan Officers process and underwrite their own originations.  The theory is to properly serve their community, loan officers and their manager must be empowered to make underwriting exceptions to accommodate the customer. Given the increased focus on anti-money laundering (AML), governance, risk and compliance (GRC) and threats of cyber-attack, ransom ware, email scams to fund terrorist organization and mortgage fraud made easier by technology. Taking preventative measures is critical and segregation of duties is a key part of those measures. Buckley Advisors can perform operational analysis, create policies and procedures, and provide guidance in this and many other areas."

In a distantly related matter, PHH Corp. will pay a $28 million fine after examiners uncovered "persistent shortcomings" in its mortgage origination and servicing practices. Under a consent order with the New York State Department of Financial Services, the company's PHH Mortgage Corp unit and its PHH Home Loans LLC affiliate will also employ an outside auditor for one year, to help identify and make refunds to borrowers who were overcharged on closing costs. PHH was accused of mishandling foreclosures, including by failing to provide relief to qualified borrowers, and letting employees sign foreclosure-related documents after "perfunctory" reviews. PHH was also accused of imposing larger-than-expected fees on unwary borrowers, and using a compensation plan that would reward employees for steering borrowers into risky or unnecessarily costly loans.

In a statement, PHH said it settled to avoid the cost and distraction of litigation, and has made "substantial strides" in improving its servicing operations. It previously said it had set aside money for the accord in this year's third quarter. For those playing along at home, remember that PHH Home Loans is a joint venture between PHH and Realogy Holdings Corp.

And plenty of lenders lie awake at night wondering whether cities (in this case, Miami) can sue banks under the Fair Housing Act even though the law gives standing specifically to "aggrieved persons." During arguments this week, the justices seemed to split 4-4 on the question, an outcome that would be a win for Miami and bad news for banks. And thus we have the Supreme Court of the United States (SCOTUS) revisiting 2008's housing collapse with banking test cases. At issue are two cases testing whether Miami can sue Wells Fargo and Bank of America under the Fair Housing Act for alleged racial discrimination in mortgage terms and foreclosures. 

Suffolk University Law School Professor Kathleen Engel believes that expanding municipalities' authority to curtail predatory lending that can destroy neighborhoods is sensible policy. Likewise, it is critical to permit cities to recover for the blight that exploitative loans can leave in their wake. Engel published the article "Local Governments and Risky Home Loans," which addresses the issue. The abstract summarizes the problem: "Municipalities from the Central Valley in California to Upstate New York bear the legacy of reckless mortgage lending. Foreclosed homes and toxic titles have caused blight and cost communities billions of dollars. Many cities tried to halt the risky loans by calling on state and federal legislators and regulators to intervene. Some even passed ordinances aimed at curtailing the high-cost loans that were destroying their neighborhoods. Their pleas were dismissed and their ordinances overturned...."

On the good news side of the ledger, Moody's Investors Service has affirmed the servicer quality (SQ) assessments for Ocwen Loan Servicing, LLC at SQ3- as a primary servicer of prime, subprime, second lien and special servicer of residential mortgage loans. Moody's also affirmed Ocwen's master servicer assessment of SQ3. Moody's writes, "As of 30 June 2016, Ocwen's servicing portfolio totaled approximately 1.47 million loans for an unpaid principal balance of approximately $219.5 billion. The portfolio has declined from the prior review in part to the company's decision to sell a significant portion of government sponsored enterprise (GSE) mortgage servicing rights (MSRs). 

"Additionally, the company is currently unable to acquire new mortgage servicing as part of its agreements with the New York Department of Financial Services and California Department of Business Oversight. Ongoing inquiries by the Securities and Exchange Commission and CFPB remain along with continued oversight by multiple regulatory monitors. During the review period, Ocwen improved its risk management, quality control and compliance processes by enhancing its oversight and monitoring procedures and increasing staff in these areas. The company has continued to demonstrate above average performance metrics across its operational areas including collections, loss mitigation and timelines. The SQ assessments reflect Ocwen's above average collections for subprime and second lien loans, and average collections for prime loans. The company's loss mitigation abilities, as well as foreclosure and REO timeline management, are assessed above average while the company's loan administration function is assessed as average. We view the company's servicing stability as below average, a view that incorporates the company's corporate family rating of B3 on negative outlook."

Keeping on with positive news, in the "good news" category in capital markets news, holdings of the top 25 banks was released and provided insight into the demand for MBS. In Q3 of 2016, banks added $49 billion of Agency MBS, a significant increase from Q2. The data also confirmed bank's appetite for purchasing more U.S. Treasuries, which posted the fastest growth since 2014, and reported a net sale of Ginnie Mae securities, citing the overall rich valuations from overseas investors.

Also, regarding the election, conventional wisdom suggested that the odds of a December interest-rate rise from the Federal Reserve would fall because the prospect of a Trump presidency represented a new source of significant uncertainty. The market-implied odds did fall, but negligibly, per data from the federal funds futures market. The Wall Street Journal reported that Trump would not be seeking Federal Reserve Chairwoman Janet Yellen's resignation. But neither would he appoint her to a second term when her current term ends in February 2018. And who knows what will happen between now and then? 

Trump said he would also boost infrastructure and defense spending, cut taxes, and deregulate - all of that will both stimulate the economy and be inflationary, thereby steepening the yield curve. And the president-elect has said he would call for a moratorium on new financial regulations and has often spoken of "dismantling" the Dodd-Frank financial reform law that created the CFPB.

But on the bad news side of things, the 10-year Treasury yield saw its biggest jump in three years, and yields went back to where they were in January, as investors prepared for a President Trump and a supportive Congress to sharply increase U.S. government borrowing. Wait a minute... isn't that more of a Democratic thing? Trump will not even be inaugurated until late January, much less have his plan passed by then, but his campaign proposals were radical enough that traders sold. Blame some of President-Elect Trump's proposed polices regarding tax cuts, fiscal stimulus, and infrastructure spending. In addition, the stock market staged quite a turnaround. Go figure. 

Treasuries initially rallied on the massive risk-off trade with the 10-year note hitting a low of 1.72%, versus the 1.86% close, before ripping higher hitting a high yield of 2.09% just after the sloppy 10-year auction, for an intra-day range of 37 basis points - larger than even the 30 bp range in the post-Brexit trade. Our benchmark 10-year price sank over 1.75, 5-year Treasury securities sold off .625, and agency MBS prices followed but not as badly.

Looking at the big picture, remember this verbiage from the FOMC's meeting last week? "The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way." But what if principal payments go down? With the higher rates comes less chance of the Fed receiving money from rate & term refis and thus early payoffs to purchase more agency MBS. That's a bit of a double whammy (higher rates lead to fewer refinances, fewer refinances lead to less Fed purchases, less Fed purchases lead to higher rates), although with many areas appreciating cash-outs are picking up. And there are borrowers selling their homes and moving up. 

Jobs and Announcements

If you are you looking to become an expert in your field then you should join the Sierra Pacific Mortgage's webinar on Wednesday, November 16.  For 35 years, the National Association of REALTORS has developed their expertise by researching homebuyer and seller trends. Jessica Lautz, Manager of Member & Consumer Survey Research, will be speaking on home buyer demographic trends and how they have changed over the years. This promised to be a great Market Power for anyone in the business.

CapWest Mortgage is searching nationally for a self-motivated, energetic Branch Sales Manager with an entrepreneurial vision and proven track record to scale an existing, high-volume sales team inside a cloud-based call center. "Our ideal candidate can run a sales floor with military precision. He or she has 5+ years of experience growing mortgage talent with exceptional attention to detail, an analytical mind, and a solid command of technology. We are looking for the absolute best in the nation to drive an additional billion dollars to our origination platform over the next 18 months - if you believe this is you then contact Yashicka Rose, Director of Human Resources."

Jim Boghos, President of Boghos Search Group, is in the midst of several searches. These include a SVP of Capital Markets for a $3 billion originator based in Northern California (hedging experience is a plus), and a Chief Compliance Officer and General Counsel (managing compliance but also serving as GC) based in Northern California. Mr. Boghos is also helping companies search for a National Operations/COO for a company with designs of being a multi-channel national originator (Direct to Consumer, TPO Wholesale, and Distributed Retail in the Southeast. Direct 407-790-7500 ext. 100.

What's the number one reason loan officers and branch managers consider leaving their current lender? "It isn't compensation," says Assurance Financial. "It's lack of support from the home office, and the most important part of that support is closing loans on time." Assurance Financial is committed to making sure each of its LOs and branch managers succeeds through superior technology, an excellent CRM program, corporate marketing dollars allocated per branch, ongoing training resources and the best back office support in the business. The company is selectively seeking Producing Branch Managers and Experienced Mortgage Loan Originators. If you'd like more information, reach out to Paul Peters, CMB (225-239-7948) or visitlendtheway.com/careers.

The second book in a series for mortgage professionals is now available and will prove useful for new people to the industry as well as seasoned veterans. "Becoming the Successful Mortgage Broker" by Jason C. Myers offers in depth information for someone getting started and proven successful sales tips for more experienced loan officers. The format of the book allows you to look at tips you can use to better your business as well as commentary on the current market and useful information for mortgage consultants. The book can be found on Amazon.