What does Florida have that the rest of us don't? The highest percentage of cash buyers according to Zillow's latest research.
There are plenty of reasons for this, but as of the second quarter of
2015 with 51 metros analyzed, cash purchases of homes were far more
common in Midwestern and Southeastern markets, particularly in Florida,
than in the Western U.S. The five markets with the highest percentage of
all-cash home purchases were all in Florida. Metros with small shares
of cash buyers tend to have younger populations, while markets with
higher shares of cash buyers tend to have a larger proportion of
households headed by a widow/widower. (Interestingly, among the 10
markets nationwide with the lowest share of cash buyers, only one is not
in the west - Worcester, Massachusetts, with 21 percent of home
purchases made with cash. Colorado Springs has the lowest share of cash
buyers among large metros analyzed, at 14 percent.)
Must be something in the water causing this rash of settlements: JPMorgan Chase has settled its legal scores in the Lehman Brothers case ($1.42 billion), with the State of Ohio ($150 million), and now bond insurer Ambac Financial Group Inc. ($995 million).
No one doubts that banking and mortgage banking will see continued mergers and acquisitions this year. STRATMOR's Jim Cameron and Jeff Babcock
attended the MBA's M&A workshop last week, and Jeff wrote, "If
attendance at the last week's very successful M&A Workshop conducted
by the Mortgage Bankers Association is a reliable leading indicator,
the industry should experience a more robust level of deal activity than
any recent period. Participants were an interesting blend of motivated
buyers, M&A advisors, attorneys, and a few vendors. (If there were
any prospective sellers, they would have been reluctant to raise their
hand to disclose their intentions.) The Workshop panelists provided
experiential information and insights for both buyers and sellers,
supplemented by legal/regulatory considerations and post-closing
dynamics and recommendations.
the vantage point of an active player in the M&A space STRATMOR had
several key takeaways. In the current seller's market environment,
there is significantly greater investor demand than there are
attractive, well managed retail platforms available for sale. Compared
with organic recruiting, today's buyers believe that an acquisition
growth strategy is more efficient, less risky and maybe even more cost
effective. Perception that you can buy better talent than you can hire
which favors the buy vs. build option. Left largely unaddressed was what
factors might motivate sellers to explore their options (note that
STRATMOR, in currently representing a handful of sellers, has learned
some helpful lessons).
sellers encouraged their peers to conduct more extensive operational
due diligence on their prospective buyers before closing the deal. While
it's a cliché to emphasize the critical nature of cultural
compatibility, both sides clearly benefit from digging deeper into the
implications of cultural practices ... maybe even retaining an advisor to
provide an independent assessment. Too little attention is typically
paid to planning the integration/assimilation, causing unnecessary pain
and suffering during that initial transition period ... much of which
could have mitigated by better project management. An experienced
acquirer brings many tangible benefits and valuable lessons to the
seller organization. Originator compensation compliance has been
elevated to a key consideration in M&A negotiations. And at the end
of the process, it's personal chemistry and 'attitude' that can make the
difference between success and failure." Thanks Jeff!
And that is just mortgage bankers. What about bank M&A?
Steve Brown with PCBB writes, "We had fewer bank and thrift (bank)
deals in 2015 than in 2014 and the percentage of bank deals vs. the
universe of the industry was right in line with longer term averages.
(During the last 10 years) you find that for any given year the
percentage of banks at the end of the year is roughly about 4% less than
the percentage that started the year, or about 1% per quarter.
2015, the number of bank and thrift deals was 281 according to SNL
Financial. This compares to 287 (in 2014), 227 (2013), 222 (2012) and
152 (2011). According to FDIC data, the number of banks and thrifts that
existed at the end of 2010 was 7,659 vs. about 6,228 that were around
at the end of 2015. That means about 1,430 banks went away or about 286
per year....what this basically tells us is that for 2016 (at least
historically speaking), somewhere around 2% to 4% of banks and thrifts
will merge away just as they have each year prior based on the pure math
of it all. That means we start 2016 with about 6,228 and it will end up
around 6,100 to 5,980 or so (125 to 249 deals). To be clear, we
absolutely believe the industry will continue to consolidate, just not
at the same pace as some might have you believe and based on the
in the last week or so we learned that in Illinois Royal Savings Bank
($205mm) will acquire Park Federal Savings Bank ($146mm) for about
$240,000 in cash. Wintrust Financial ($22B, IL), a 15 bank holding
company, will acquire Foundations Bank ($125mm, WI) for about $30mm in
cash. mBank ($746mm, MI) will acquire The First National Bank of Eagle
River ($141mm, WI) for about $12.5mm in cash. And Pinnacle Bank ($8.5B,
TN) will acquire an additional 19% of Bankers Healthcare Group for about
$114mm, bringing its total ownership percentage to 49%.
On the topic of risk sharing Scott Olson wrote, "On behalf of CHLA
I wanted to respond to your column about GSE up-front risk sharing,
since CHLA has a different take than the MBA does on this. CHLA is very
concerned about the use of up-front risk sharing and its potential
negative impact on independent mortgage bankers. CHLA is particularly
concerned if upfront risk sharing is done by large vertically integrated
bank/securities firms, as was the case in some large J P Morgan risk
sharing deals that have been done This approach creates the opportunity
for the big banks to monopolize GSE lending if upfront risk sharing
securities deals are the dominant form of risk sharing.
risk sharing also raises the risk of a return to significant volume
discounts, if the process is done upfront and there are no protections
against this. The process described in your article describes how
lenders could cut deals with the PMIs - and obviously the big banks with
large volume are in the position to cut the best deals. Finally, it is
not clear why doing the risk sharing upfront really reduces GSE risk
compared to back end risk sharing. Above all, we need more transparency
about the development of risk sharing and there needs to be more focus
on the impact of up-front risk sharing the ability of small and mid-size
mortgage lenders to access the secondary market through the GSEs.
"FYI, here is a link to a Housing Wire CHLA Op-Ed from November on GSE issues - just below that is excerpted paragraphs about our concerns about up-front risk sharing. 'CHLA
supports risk sharing - but is concerned about up-front risk sharing
through securitizations by a few big vertically integrated
bank/securities firms. These mega-banks could leverage risk-sharing
securitization to generate funds to exclusively originate GSE loans
through an affiliated bank. There are already two such deals totaling $2
billion with JPMorgan Chase. If this becomes the dominant form of risk
sharing, small and mid-size firms could be shut out of the process. FHFA
and the GSEs should be fully transparent about these risk sharing deals
- and should ensure that small and mid-size lenders aren't shut out -
by banning practices such as volume discounts and stopping mega-banks
from dominating both risk sharing securitization and underwriting of the
loans they fund.'"
wasn't a lot to talk about in the bond markets yesterday, so I won't
waste your time: there were no major economic data releases, Treasury
auctions, or Fed speakers (we are in the blackout period ahead of this
week's FOMC meeting). We do have some news out today, however: the
November Case-Shiller 20-City Index, the November FHFA Housing Price
Index, and January's Consumer Confidence. We also have a $26 billion
2-year Treasury auction. The risk-free 10-year T-Note ended Monday
yielding 2.02% and in the early going today it's sitting around 2.01%
and agency MBS prices are a shade better.
Jobs and Announcements
"A dynamic, growing mortgage banker is searching for a seasoned sales coach
with a proven track record to help it reach the next level of
production with a focus on customer service and compliance. The 30+ year
old retail lender is looking for a forward thinking, creative achiever
to lead its proprietary sales coaching platform, featuring a system for
accountability. (This position will be housed in the West/Southwest
region.) The lender, with wide-ranging licensing in several states,
'offers competitive pricing and products, exceptional tools and
support, and is owned and led by top producing originators with an
intimate knowledge of the keys to reaching the pinnacle of success.'"
For confidential consideration please send me your resume at rchrisman@robchrisman. com. (Please specify opportunity and excuse any delays in responding due to travel.)
Jim Loving, Director of National Sales for Planet Home Lending's Correspondent Division, is looking for a Southeast Regional Sales Manager.
This position will be responsible for establishing and maintaining
relationships with correspondent customers within their respective
regions. The candidate should be active in a Correspondent channel and
must be located in the Southeast. Planet Home Lending supports multiple
business channels uniquely positioned to provide competitive products
and services. The company is an approved Fannie, Freddie, FHA, VA, and
USDA direct lender and $13 Billion mortgage servicer. If interested in
joining our employee-friendly, growing organization, please send an
updated resume in confidence to Chase Gonzalez.
There are big changes at First Community Mortgage. Michael Hilleary, former director of correspondent lending has been promoted to Chief Operating Officer. At the same time,
former SVP of retail, has been promoted to Executive Vice President and
Director of Lending. In the COO role Hilleary, based in Louisville, KY,
will oversee secondary marketing, information technology, credit
administration, accounting, post-closing and servicing. Voyles will be
responsible for all the company's lending channels, including its
retail, wholesale and correspondent divisions and is based in
Murfreesboro, TN. FCM, is
a wholly-owned sub of First Community Bank in TN and is a direct
Fannie, Freddie, and Ginnie approved lender serving over 35 states.
Stonegate Mortgage Corporation announced that Timothy Verinder
has been named Southwest Regional Manager. In this role, he will lead
the Southwest Region's Third Party Origination sales teams, selling
products in all three TPO channels - broker, non-delegated and bulk
mandatory. He will report directly to Scott Houp.
the nation's second largest retail mortgage lender, announced John
Fikany has joined the company as Vice President of Strategy. "In the
newly created role, Fikany will be responsible for development of
strategy and execution for large technology and other initiatives, while
identifying and leveraging technology and business opportunities within
Quicken Loans and its family of companies."
And the Stearns
Correspondent Lending Division is expanding and recently hired two key
Regional Managers: Gabe Medrano and Nicole Avey have joined the Stearns
team supporting the East and West Sales Divisions respectively. Congrats
on the new assignments!
There's a webinar this Thursday, January 28 at 2:00 PM EST on Easy Steps to Becoming a Mortgage Broker
from National Mortgage Professional and presented by a huge proponent
of wholesale and the Mortgage Broker, Mat Ishbia (President and CEO of
United Wholesale Mortgage). He'll share tips to opening a broker shop,
the advantages that brokers have over bankers and how to recruit top
talent. Don't miss this webinar that will show you why today's brokers
have the upper hand. If you're an MLO or Branch Manager and want to
become a Mortgage Broker, or are you already a Mortgage Broker and want
to make sure you did it right, register here.
And Hammerhouse, LLC has launched its 6th Annual Survey for Mortgage Leaders and Producers. The
32-question survey focuses on the "Six Core Components"- Business,
Leadership, Culture, Operations, Technology, and Geography. "With our 6th
survey, we will continue to analyze year over year trends relative to
the concerns, needs and wants of the life blood of this industry: YOU,
the Leaders and Producers. The results will be posted on March 31st. Participation is free, takes about 3 minutes, and respondents will be entered in the raffle for a free iPad.