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MBA Releases Lender Profit Numbers for 2013 - Ouch; New HUD Head
Posted to: Pipeline Press
Tuesday, May 27, 2014 7:50 AM

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The mortgage industry continues to do what it can to not only dig its way out of the poor public relations created from lending from 5-10 years ago, but give back to the community. Here's a short video from Fairway Independent showing what it is doing in terms of The American Warrior Initiative. Hats off to Fairway and other lenders offering similar opportunities to those in need.

On the jobs front, Kinecta continues to grow its Wholesale lending with Account Executive positions open in Southern California (Los Angeles Area), AZ, Las Vegas, Seattle, Chicago, MD, and VA. "Kinecta FCU is one of the nation's leading credit unions, with more than $3.5 billion in assets and serving over 270,000 member-owners across the country.  Kinecta offers a competitive compensation and benefits package in addition to a dynamic culture and an exceptional product line (check out limited overlay agency, jumbos, reduced MI programs and our new 2nd TD combos with CLTVs up to 89.90%)."  If you are interested in joining a successful team, please send your questions and resume to Anthony Jackson at Anthony.Jackson@Kinecta. org.

Union Home Mortgage is expanding and looking for LOs and branches. "Led by MBA Chairman-elect Bill Cosgrove, Union Home Mortgage has successfully grown by mergers of branch and independent mortgage bankers nationally in the past five years. Union Home has created a tremendous transition formula and a program that gives existing leaders a powerful origination platform for their teams. Delivering direct to Fannie Mae and Ginnie Mae has created excellent pricing and operational ease, and is on the cutting edge of origination technology." If you have interest in learning about this strategy, contact Corey Caster directly at ccaster@unionhomemortgage. com.

And Hilco Real Estate Finance (HREF) has an immediate opening in its Northbrook IL office for a Chief Financial Officer, to lead all financial, accounting, portfolio management, and management reporting systems for the Company, and a Senior Vice President, Sales and Business Development to lead the pursuit of new business. The SVP, Sales and Business Development will play a pivotal role in revenue generation for the company, supervising and directing a team of HREF Sales Representatives and establishing and maintaining a productive and efficient business development strategy. HREF is embarking on a very aggressive growth strategy and is extremely well capitalized. Growth will include additional loan products, states, and distribution channels. Hilco Real Estate Finance is a direct private money lender operating in 10 states serving residential rehab investors who acquire, renovate, rent, and sell properties. "We primarily provide lines of credit to established 'fix and flip' borrowers in select national markets, supported by 'common sense' underwriting and flexible, customized programs. HREF also provides loans to investors that rehabilitate and lease properties, and expects to add low LTV non-rehab, and construction loans. Our lines of credit are available up to $4 million. We do not loan on owner occupied properties." Contact Aeron Berg for complete job descriptions and to submit resumes: ABerg@hilcoglobal.com.

Before plunging into the news, late last week the commentary had an update on unallowable origination fees. It actually applied to the Veterans Administration (VA) not the state/commonwealth of Virginia (confusingly also called VA). So the "unallowable origination fees" emanates from the Veterans Administration, not Virginia as several astute readers pointed out. Thank you!

The industry knows that 2013 was the tale of two profitability profiles for residential lending: the first half and the second half. Now the MBA have given us the numbers to back it up. In the first half, 95% of small mortgage banking firms were profitable. In the second half, only 69% of surveyed lenders posted pretax financial profits. (Heck that is more than I thought!) The MBA report shows that the average profit per newly originated loan was $1,660 in the first half of the year, but fell to $517 in the second half.

(Read More: Mortgage Banking Profits Hit Hard in 2nd Half of 2013)

The MBA's headquarters are in Washington, DC (not a state or a commonwealth), and we also had some news out of DC that is important but did not make a big splash. In a second-term Cabinet reshuffle, President Barack Obama tapped 39-year old San Antonio Mayor Julian Castro to be the nation's next housing secretary, giving a prominent national platform to one of the Democratic Party's most celebrated up-and-comers. Obama also announced he was nominating current Housing and Urban Development (HUD) Secretary Shaun Donovan to run the White House budget office, a spot left open when Obama asked his former budget chief to take over the Health and Human Services Department last month. Political pundits believe that Friday's announcement gives another major boost to Castro's profile, just as Democrats are viewing him as a potential vice presidential candidate in 2016.

The Department of the Treasury's Financial Crimes Enforcement Network ("FinCEN") finalized a Rule in 2012 which defines non-bank residential mortgage lenders and originators (RMLOs) as loan and finance companies, for the purpose of requiring them to establish anti-money laundering programs and report suspicious activities.  The Compliance Date for meeting this Rule was August 13, 2012. This new Rule (now almost two years old) requires that an Anti-Money Laundering (AML) program include an independent AML audit test.  An audit of the AML policy is referred to as one of the "four pillars" of an effective anti-money laundering program and is designed to test the RMLO's program for compliance with relevant regulatory requirements and mandates as well as its own internal AML policy. The scope and frequency of the testing is commensurate with the risks posed by the company's products and services, though most firms elect to be audited annually. An officer or employee may conduct the audit if he or she is independent from the firm's compliance department; otherwise a qualified third party must conduct the audit.

EA Compliance, Inc. is a leading supplier of Anti-Money Laundering compliance training and AML audit services to the mortgage lending and mortgage origination industry. They conduct independent, online AML audits without the need for a site visit. Contact Larry Schneider at lschneider@eacompliance. com to learn more about lender's FinCEN responsibilities.

Turning to some lender news...

Fifth Third Mortgage Correspondent Lending has provided Federal Disaster Area information per President Obama to include Arkansas - Faulkner County and Mississippi - Itawamba County, Lee County, Lowndes County, Madison County, Rankin County, Wayne County and Winston County.  Fifth Third's Disaster Policy is available within the Correspondent Seller Guides on Correspondent Connect or Wholesale Connect.

Franklin American Mortgage Company Correspondent will require the New York Prevailing Interest Rate Commitment Disclosure on all loans in the State of New York with applications dated on or after June 1, 2014. In addition, beginning with applications dated on or after July 1, 2014, the Homeownership Counseling Disclosure with the list of at least ten counseling organizations based on current zip code will only be accepted.

WesLend Wholesale is now offering a brand new product...NHF Sapphire. The National Homebuyers Fund (NHF) Sapphire Down Payment Assistance (DPA) program offers up to 3% towards down payment and/or closing costs for qualified borrowers using an FHA first lien. The DPA is provided via a grant. It is not recorded as a lien on the property and it does not have to be repaid. Contact your Account Executive for all the details.

360 Mortgage Group announced its Reverse Mortgage Division has expanded its production infrastructure by launching a retail branch model to support reverse mortgage production throughout the United States. This new retail branch model is the Reverse Division's third production channel for the reverse mortgage market, and will supplement its wholesale and inside-direct sales channels. As a first step in its national expansion plan, the Reverse Division has opened its first branch in Dallas, Texas and currently has additional retail branches pending in seven other states. In conjunction with the launch of its new retail branch model, 360 Mortgage Group has named reverse industry veteran Nancy Pedone as National Reverse Branch Manager of its Reverse Division.

M & T Bank Correspondent updated mortgage document expiration dates for all FNMA, FHLC, and Treasury products from 90 days to 120 days. Its seller guide, in reference to flood insurance requirements for conventional loans has been added. For all the up to date product bulletin information, be sure to contact your Account Executive.

On May 19th from the floor of the MBA National Secondary Conference & Expo in New York City, Ditech Mortgage Corp unveiled a series of products and services tailored for the correspondent banking community. These products included MyCommunityMortgage, Expanded LPMI and Freddie Only.

Pinnacle Capital Mortgage spread the word that it was just ranked 3rd on the Albuquerque Journal's list of Top Work Places in New Mexico. "Additionally, we are the only mortgage lender of any size on the list with credit to our local support staff of loan coordinators, processors and underwriters for making 'PCM' such a happy place for our MLO's."

Under Training and Events...

MBA Education's popular School of Mortgage Servicing (SOMS) now gives you a choice. Register for the entire two-week instructor-guided online program, or select individual webinar modules that meet your needs. The full two-week course begins June 16th and includes all eight Webinar Modules, along with readings and activity assignments, online discussion board assignments and a final exam. Students who successfully complete the course will be issued a certificate of completion for their training transcript. SOMS complete 2-week course cost: MBA Member price $950, Nonmember price $1450. Individual Module cost:  MBA Member price $199 each, Nonmember price $249 each.

And the MBA is offering its School of Mortgage Banking Course II: Managing Profitability and Risk. "Open to all professionals interested in a deep dive into developing new markets, production management, servicing portfolio valuation and pricing strategy. This exclusive, four-day classroom course emphasizes organization and management of the production, servicing and secondary marketing departments, while effectively controlling risks and maximizing bottom-line profits. Courses are available in two locations: Washington D.C. July 22nd - July 25th and Irvine CA. September 9th - September 12th. Early Registration fees: Member price - $1440, Non-members - $2160. Regular Registration fees: Member price - $1600, Nonmember price - $2400.

"Economics: The science of explaining tomorrow why the predictions you made yesterday didn't come true today." Last week seems like a long time ago, but as you recall, home sales and Fed chatter dominated last week's U.S. economic scene. April new home sales increased by 6.4% and April existing home sales increased slightly by 1.3%: some analysts believe that both better supply and lower prices, along with lower mortgage rates, job gains and better weather should be a foundation for continued gains in the housing sector. The minutes of the April 29/30 FOMC meeting show that an active discussion is going on within the Fed about how to renormalize interest rates.So why, if the economy is picking up some steam, do rates remain low? Well, it is not picking up that much steam, and the discussion among economists is centered on just how disappointing it is. Most data continue to show modest improvement but overall economic growth shows little indication of breaking out of the underwhelming trend from recent years. Blame it on the weather, on people being under-employed or dropping out of the labor force, on the Millennials not buying houses, on problems overseas, whatever. And housing is definitely not setting the world on fire: we are more than halfway through another disappointing spring selling season and we are beginning to hear more talk about new policy initiatives to boost home buying and new home construction.

There might be some news this week to change minds. Today we'll have Durable Goods Orders (the number of new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods), Consumer Confidence, along with some FHFA House Price Index numbers and the S&P/Case Shiller numbers with their two-month lag. On Thursday, May 29th, besides the usual Jobless Claims we'll have the Gross Domestic Product (GDP) numbers. For anyone not familiar with them, GDP represents the total value of the country's production and is the all-inclusive measure of economic activity.  We'll also have Pending Home Sales. And lastly on Friday, May 30th, Personal Income and Consumption, the Chicago Purchasing Manager's survey, and the University of Michigan Confidence number. For actual numbers, Friday's closing yield on the 10-yr. T-note was 2.54% and in the early going we're exactly unchanged on that and agency MBS prices.




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Mortgage Rates:
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  • 15 Yr FRM 3.12%
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  • Jumbo 30 Year Fixed 3.73%
MBS Prices:
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  • 30YR FNMA 5.0 110-12 (0-02)
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  • 30YR FNMA 5.5 111-25 (0-00)
Recent Housing Data:
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  • Refinance Index 0.90%
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  • FHFA Home Price Index 0.67%