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Eminent Domain News; Community Bank Update; Clear Capital's Home Price Drop
forget to wear a little green today, and this was seen at a local bar:
"Special Today Only! Buy one beer for the price of two, and receive a
second beer absolutely free!" Some numbers are deceiving, others pretty
straightforward. Mortgage banks are focused on mortgages, but bigger banks have
other lending channels. For example, SNL Financial reports the top 5 depositories in auto loans
as of Q4 2013, in billions, are Ally Financial ($52b in auto loans),
Wells Fargo ($51b), JPMorgan Chase ($42b), Capital One ($32b) and Bank of
America ($30b). This group alone represents about 58% of the $353 billion
in aggregate auto loans at banks and thrifts at the end of 2013.
I'm not there yet, but CNN reports that 33% of people 65-69 years old are in the workforce vs. 22% in 1990. In the Venn diagram of life, young people just ain't buying homes like their predecessors.
Formerly known as "Gen Y" (or "generation whine" to some), this age
group lies somewhere in birth range from the early '80s to early '00s,
placing some of them in the ready-to-stop-renting-time-to-start-buying
category. This is the generation blamed most in recent times for not
"behaving rationally," which really makes "housing experts" nervous.
However, Housing Wire writer
Kerri Ann Panchuk, sees the overall lackluster demand not in this age
group, but those well into their 30's who haven't stepped up to the
plate. She writes, "For years now, everyone has been blaming the
Millennials for stalling the housing recovery because of their
reluctance or inability to purchase a home, but it may be the cohort
right before them - the generational cuspers, or those born from 1978 to
1982 - who started this trend. This age group now has the lowest
homeownership rate in decades. They're best defined as not quite Gen-X,
not really Millennials, but stuck somewhere in between. Back in 2012,
this same group had a 47.9% homeownership rate, which is 6.5 percentage
points lower than what those five years older had achieved at the same
point." Is it safe to assume those most caught in a <insert option ARM, 100% financed>
in '07 fell into this generational definition, and now have a different
view of what "home ownership" means? Does this generation identify more
with the "occupy Wall St" movement, than it does with The Cosby family?
I don't know, but this conversation is nothing new. Almost a hundred
years ago they asked the question: 'How 'ya gonna keep 'em down on the
farm, after they've seen Paree?'
Eminent, imminent, what's the diff? Both seem to be still alive when it comes to domain, and from Washington State, Aaron C. contributes, "I'm not an English major, but they oddly refer to it as 'Imminent Domain' which made me laugh."
Uh oh - are we running out of steam? Clear Capital
released its February 2014 home price trends a couple weeks ago, and
apparently it is more current than both CoreLogic and Case-Shiller
numbers. This month Clear Capital reported on the first drop in quarterly gains since 2010.
banks have long played an important role in the U.S. economy, providing
loans and other financial services to households and small businesses
within their local markets. These banks have many unique challenges in
the lending industry. One of those challenges include how to offer "big
bank services" and compete in local economies of scale while maintaining
the advantages of being a true local bank. Many lose their way (see:
Tarp Auctions 19-23), but more stay within themselves and continue to
concentrate on profitable business channels, market share, and customer
service. Even with concentrating on all the things community banks get
right, volumes last year were down. Ken McCarthy and Marshall Schraibman
write in SNL Financials eBulletin, that loan growth is still a tough find for community bankers. They write, "Last
year was relatively slow in terms of loan growth for community banks
around the country, and many small financial institutions seem to be
guiding somewhat conservatively for 2014 as well...median fourth-quarter
2013 loan growth among commercial banks with less than $10 billion in
assets, when compared with the previous quarter, came in at 1.48%
nationwide. Compared with a year earlier, median growth nearly reached
4%." According to the article, generally weak demand resulted in
slow growth in every region of the country during the fourth quarter of
last year, with signs of no improvements heading into 2014. The
Mid-Atlantic region (for banks under $10B in assets), along with New
England, showed approximately 2% growth Q3-to-Q4, while the Southeast
lagged far behind, showing .68% growth.
The National Reverse Mortgage Lender's Association has announced the agenda
for its Northeast Regional Meeting, to be held March 18 - 19 in New
York, N.Y. The meeting, dubbed "New HECM, New York," will focus on
improvements to the Home Equity Conversion Mortgage, or HECM, and
highlight its use as a key financial planning tool for retirees. In July
2013, the U.S. Department of Housing and Urban Development (HUD) was
authorized by Congress to establish additional requirements to improve
"the fiscal safety and soundness" of the HECM program. The changes
resulting from that authorization are now underway and will be a major
focus of the meeting.
The Illinois Mortgage Bankers Association
is hosting a mortgage industry seminar on March 26th in Lyons,
Illinois. A representative from the CFPB will be a guest speaker
providing an update. Additional panels and sessions include the
internal audit function and issues associated with the implementation of
the latest regulations, including QM, the 3% limitation, and preparing
for a CFPB audit. Advanced registration is required. Contact IMBAInfo@att.net to register for the seminar.
In order to comply with ATR and QM, Mountain West Financial is now requiring closing agents to prepare a separate addendum to the HUD-1 summarizing the fees included in lines 801 and 802. When
listing third-party pass-through fees, closing agents must clearly list
the fee type, who it was paid to, and what kind of entity it was paid
to (broker/lender, third-party service provider, affiliate, lender,
credits reflected on section 200 must be itemized either in this
section or on an addendum page, and in order for these to be excluded
from the points and fees test, there must be a written agreement
executed by the buyer and seller that specifies and itemizes the fees
paid to the seller by name and dollar amount. MWF
will also be conducting a Final HUD-1 review and points and fees test
once the loan has closed, and if there are any fees that have changed
from the original HUD-1 escrow will be contacted for any changes and/or
response to the California Homebuyer's Downpayment Assistance Program
accepting manual underwriting on all loans with a non-CalFHA manually
underwritten FHA first mortgage, MWF is requiring all applicable loan
files to include a HUD 92900-A with page 3 signed by the underwriter. The HUD-92900-LT only requires an underwriter's signature on downgraded or manually underwritten loans.
has updated its DU Refi Plus guidelines to allow LTVs up to 125% on
primary residences provided that the FICO is 660 or above and the DTI is
50% or below, regardless of AUS approval. These requirements only apply to loans with LTVs over 105%.
Third Federal Savings and Loan
has expanded the number of states in which it offers a first mortgage
refinance product to include New York, Maryland, New Hampshire and the
entire state of Kentucky. Additionally, it is expanding its home equity
line of credit offering to include the above states, as well as
California, New Jersey and Pennsylvania. Third Federal announced it now
offers first mortgage loans in 17 states; and home equity lines of
credit in nine states.
Parkside Lending is has added low-, mid-, and high-rise attached condos to the list of property types eligible for Jumbo loans (Jumbo I and III). Condo
projects must meet FNMA eligibility requirements and be warrantable
through CPM Expedited Review types R or S, as limited reviews will not
changed its 5/1 ARM cap structure from 2/2/6 from 5/2/5, effective
immediately; however, a 2/2/5 cap structure may still be accommodated
with a pricing adjustment.
new Reverse Mortgage product has enjoyed increased popularity over the
last couple of months, recording an uptick of 50% in daily volume. For
those interested, the program is available for primary residences with
loan balances under $375,000, home loan amounts less than $625,000, and
LTVs of 0-50% for borrowers over the age of 62.
rates in the United States are down since the start of the year - but
if our economy is doing better, shouldn't rates have moved higher?
The heightened perception of uncertainty obscures some recent positive
metrics. And the uncertainty comes from Europe and Russia. But in this
country we'll have plenty to digest for scheduled news. Today we'll have
Empire Manufacturing, and Industrial Production & Capacity
Utilization at 3:15 AM HST (Hawaii), and the NAHB Housing Market Index.
Tomorrow the Consumer Price Index (CPI) hits the markets at 2:30AM HST, along with Housing Starts and Building Permits. On Wednesday, March 19th,
the FOMC meeting announcement hits the tape - look for no change to
overnight rates, but another drop of $10 billion in tapering. Thursday
we'll dine on Existing Home Sales, Initial Jobless Claims, and Leading
with all of that, we're most likely looking at another week of
geopolitically-driven market movement, as the headlines from Ukraine may
dominate. On top of that - where is that jet? There
is some thinking that if terrorists took it, they now are in possession
of a jet which can be outfitted to do a lot of damage somewhere in the
world - talk about a "flight to quality" if something terrible happens.
biggest event may be the vote in Ukraine's Crimean region on Sunday. As
expected, Crimea voted to secede from Ukraine; investors will be
concerned that it could lead to an escalation in the tensions between
Russia and the US/Europe. That is what is happening, although as I
mentioned it was expected, and the U.S. 10-yr T-note, which closed Friday at 2.64%, is now at 2.68% and agency MBS prices are worse between .125-.250.
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