Women who own small businesses in the United States are overall more satisfied than their male counterparts with their banking experience, according to the J.D. Power 2015 U.S. Small Business Banking Satisfaction Study released recently. The study measures small business customer satisfaction with the overall banking experience by examining eight factors: product offerings; account manager; facility; account information; problem resolution; credit services; fees; and channel activities. Satisfaction is calculated on a 1,000-point scale. J.D. Power even ranks real estate agents - congrats to Century 21.

What is a "kill chain"?  IT guys know what it is, and plenty of lenders are worried about it. Hackers dig into personal information about an employee, which is in turn used as a lure before eventually leading to the final stage of data theft from the organization. Or malware "camping out" in a company's computer systems for years at a time before acting. I don't know the "experts" come up with costs, but I recently saw a figure that on average cyberattacks cost $6.5 million per incident once ransom, clean up, and lost business costs are factored in. Are boards of directors listening? And just think about all the "minor" attacks and ransoms that aren't reported because of embarrassment or "it's too much hassle."
 
We're way past any help that changing one's passwords every six months, anti-virus software, or firewalls can provide. Kenneth E. Bentsen Jr., SIFMA's CEO and president, outlined the group's top priorities for 2016 with cybersecurity as "a top priority for the industry across the spectrum from the largest to the smallest firms." Financial fraud of seniors, shortened settlement cycles and the Department of Labor's final fiduciary rule for financial advisors are also areas of focus for SIFMA. "We strongly believe that the department should put the rule out for re-proposal," Bentsen said.
 
The Association of Corporate Counsel Foundation (ACC) released a State of Cybersecurity report. Ballard Spahr noted that the report "provides valuable insights on cybersecurity issues from more than 1,000 corporate lawyers at 887 organizations worldwide-most of whom hold the position of General Counsel or Chief Legal Officer....We have previously observed that banks and other companies subject to the CFPB's jurisdiction face the possibility that the CFPB could begin using its authority under Sections 1031 and 1036 of the Dodd-Frank Act (which proscribe unfair, deceptive or abusive acts or practices) to regulate cybersecurity policies and procedures. The ACC report can be used by in-house lawyers to assess whether their companies are devoting appropriate time and resources to cybersecurity. A company whose cybersecurity practices did not align with companies of a similar size in the same industry might be at greater risk of a UDAAP challenge if the CFPB were to scrutinize its cybersecurity policies and procedures. For more on the report, see our legal alert.  On January 12 Ballard Spahr will hold a webinar, "Lessons Learned: Best Practices for In-House Counsel from the ACC Cybersecurity Report. A link to register is available here."
 
Community banks cheered recent comments by Fed Chair Yellen who said, "Small community banks really are suffering from regulatory overload" and regulators are working to tailor regulations to "make life better for community banks, especially those that are well managed and have adequate capital." Community bankers nationwide continue to struggle to boost profitability and reduce regulatory burden.
 
Certainly alleviating that burden is one of the reasons that the wave of bank mergers continues unabated. Just in the last week we learned that NexBank ($2.3B, TX) will acquire College Savings Bank ($300mm, NJ). The First National Bank of Allendale ($185mm, IL) will acquire First State Bank of West Salem ($18mm, IL). Technology firm Q2 Holdings (TX) will acquire Social Money (IA) for $10.6mm. Social Money has the digital banking SmartyPig product used by community banks and credit unions. Raymond James Financial (FL) will acquire Deutsche Bank's US private client services business. BBCN Bancorp and Wilshire Bancorp announced a "merger of equals." CharterBank ($1.0B, GA) will acquire Community Bank of the South ($369mm, GA) for about $58.8mm or roughly 2.3x tangible book. Busey Bank ($3.8B, IL) will acquire Pulaski Bank ($1.5B, MO) for about $210.7mm in stock.
 
"Rob, one of my senior underwriters was talking about rumors of hazard insurance problems with condo HOAs. The details were vague, but have something to do with an insurance policy covering two projects not being kosher with the agencies. Have you heard anything like that?" Yes I have. Apparently the Agencies have a requirement that a hazard policy, which for condos is generally part of the monthly HOA fee, cannot be written such that it covers multiple unaffiliated projects. This is commonly called "pooled insurance". In a pooled insurance situation, there is often a per unit limit on coverage, and separately an overall limit for all of the projects covered by the policy. The issue is that if a catastrophic event occurs, and wipes them all out, that that damages could exceed the policy's limits to replace the buildings. HOAs typically have the monthly cost for their owners in their cross hairs, and they don't focus so much the potential loss, so they are happy to have the lower cost policies. And I hear that you really need to be a sleuth and ask the right questions of the insurance company, not just the agent, to get the big picture as to whether or not a suspect pooled policy actually does cover two or more unaffiliated HOA's - it isn't always initially evident in the documents......
 
Fannie has a list of frequently asked questions regarding project insurance requirements that may be of help.
 
As the real estate market continues on the upward trend, the impact homeowner association fees play on affordability is beginning to increase. One in five American homeowners pay a monthly HOA, condo, or mobile home fee on top of their monthly mortgage payment. These fees are more common in multifamily residences, as 75 percent of owners pay a monthly fee as opposed to 15 percent of single-family residences. New homes are more likely than older households to include a monthly HOA fee. For example, 1 percent of those living in a single-family home built in the 1950s or before pay a monthly HOA fee compared to 41 percent of those living in a single-family residence built since 2008. In multifamily residences, 58 percent of households living in buildings built in the 1950s have monthly HOA or condo fees, compared to 88 percent of households in building built since 2008. The majority of single-family residence homeowners pay less than $100 per month on HOA fees and for homeowners in multifamily communities, the average HOA or condo fee is between $300 to $309 per month, with 70 percent paying $200 each month. First time homebuyers are also more inclined to purchase a condominium, with 42 percent opting for a condo as their first purchase, compared to 28 percent in 2001. As HOA fees increase, affordability for these young adults declines.
 
It was true back in '08, and seven years later it's still the biggest component to a healthy securitization market. And under terms outlined earlier this week global insurers with the greatest ties to the financial system would face an average increase of 10 percent to capital requirements under new standards proposed by a group of regulators, or so says Bloomberg News. Katherine Chiglinsky and Sarah Jones write, "The increase would be as high as 18.75 percent for unregulated-banking activities by firms deemed to be in a riskier tier, according to documents released Monday in Basel, Switzerland, by the International Association of Insurance Supervisors. For traditional insurance products sold by safer companies, the figure would be 6 percent. Global regulators are seeking to limit risk at the biggest financial firms to avoid a repeat of the government bailouts that were required in the credit crisis. While more rescue funds went to banks, the U.S. had to prop up insurers led by New York-based American International Group Inc., which was hobbled by losses on derivative bets on subprime mortgages."
 
Turning our collective attention to the markets, bonds and rates continue their "up a little, down a little" trend. At this point an increase to short-term rates by the Federal Reserve's Open Market Committee is pretty much priced in - what would cause volatility is if they didn't act. But yesterday fixed-income securities ended lower and mixed on light volumes.
 
Mortgage bankers keep selling, and the Fed keeps buying. Even though QE (Quantitative Easing" officially ended, the Fed uses the money from pay downs to reinvest into agency MBS. Yesterday the NY Fed conducted two FedTrade operations, buying $963 million GNII 3% through 4% in January and $416mn Class B 2.5% and 3% out of $2.624 billion that was up for grabs.
 
This morning we've had November Retail Sales (expected +.2% with the core - ex-food & energy - number +.4%, up +.2% and +.6% respectively). We've also had the November Producer Price Index was expected to be negative for the third month in a row and was indeed -1.1%. We'll also have some minor numbers later this morning: October business inventories and a Michigan consumer sentiment figure. We wrapped up Thursday with the 10-year risk-free T-note sitting at 2.24% and this morning we're at 2.20% and agency MBS prices are better by .125.

Jobs and Announcements

In correspondent news, according to the latest rankings from Inside Mortgage Finance, AmeriHome Mortgage has "maintained its rapid growth with a huge 43.7 percent increase in correspondent acquisitions." It was the 5th largest national correspondent in Q3! In order to support its growth, AmeriHome  will be moving to a new location before year end. "We are also happy to announce the addition of John Dixon to our executive team. John will be responsible for assisting in the development of corporate strategic initiatives, and will lead AmeriHome's shared services group." 
 
Assurance Financial, Baton Rouge, Louisiana, is hiring Branch Managers and Loan Officers in Colorado, Arizona, New Mexico, Louisiana, Texas, Mississippi, Alabama, Tennessee, Florida, Georgia, Arkansas, North Carolina and South Carolina. This is an established full-service mortgage banker that prides itself on consistently closing loans on time, providing excellent marketing support, and offering aggressive compensation plans as well as medical/dental/vision and matching 401K. Assurance Financial does all its processing and closing in-house to make sure your loans get the attention they need.  Plus, they have a reputation for being a fun and friendly place to work and thrive. For more information, contact Paul M. Peters, CMB or visit Assurance.
 
Want an inexpensive way to promote your company and LO's to the Hero Community? Tom Adams of Heroes Halo wrote to me saying, "The Hero Community includes: Military, Law Enforcement, First Responders, Firefighters, Health Care Professionals, and Teachers - we provide the platform to promote your business to this special group." HeroesHalo.com is a "Cause Marketing" platform that's an affordable and make sense Hero marketing program that Lenders, LO's, and Realtors can join. Why do heroes love it? Because members "give back" to the hero when they close a transaction with one. Members love it because they get continuous and sustainable new business while forming valuable partnerships with like-minded industry pro's. Heroes Halo is growing- industry professionals are invited to join! Opportunities exist for (featured) Lenders, LO's, and Realtors. (If you'd like to learn more contact Tom Adams)
 
A quick congratulations to Tom Wind who U.S. Bank hired as president of U.S. Bank Home Mortgage. He comes over from EVP of residential and consumer lending at EverBank Financial.
 
And congrats to Lisa Patterson who has joined Home Point Financial Corporation as Senior Managing Director - Third Party Lending. In conjunction with their new national operations center, Lisa will focus on continued growth in the third party channel through developing a superior operations team, top sales staff and innovative solutions.
 
And I don't know if congratulations are in order, but it is usually a good thing when companies put legal matters behind them. In this case Morgan Stanley will pay $225 million to settle lawsuits related to its sale of faulty mortgage-backed securities to five now-defunct corporate credit unions. MS reached the settlement with the National Credit Union Administration without admitting fault.
 
And Brady Bunte, who owned and operated Trust One Mortgage, wasn't to be trusted and has been sentenced to 3 ½ years in prison and pony up over $10 million in restitution. "From March 2007 through November 2008, Bunte caused Trust One to submit fraudulent funding requests on its warehouse line of credit to National City Bank."