Bank Merger Mania; CFPB on Using HMDA Data, Exam Procedures; Wells - Ocwen Servicing Deal Iced
you want to go fast, go alone. If you want to go far, go together."
This African proverb could apply to bicycle racing, but more importantly
for the residential lending industry, it seems to be coming true. And
certainly to banking - does anyone need an easy, clever chart on bank
history? Here you go - it looks like the NCAA basketball bracket. One can't help but think about retirement accounts that profited or suffered with each deal...
But the trend with banks continues unabated. With
no banks being created, is it the FDIC's intent, along with other
regulators, to continue to concentrate assets and deposits? KBW
announced its role in CenterState Bank's signing of a definitive merger
agreement under which CenterState will acquire First Southern Bancorp,
Inc. the parent company of First Southern Bank. Upon completion of the
holding company merger, First Southern Bank will be merged with and into
CenterState Bank of Florida, NA. First Southern Bank, which is
headquartered in Boca Raton, Florida, currently operates 17 banking
locations in the Orlando, Jacksonville, and West Palm Beach As of
December 31, 2013, First Southern reported assets of $1.1 billion, loans
of $635 million and deposits of $883 million - a big fish
of the Ozarks ($4.7B, AR) will buy Summit Bank ($1.2B, AR) for about
$216mm. AltaPacific Bank ($238mm, CA) will acquire Mission Oaks National
Bank ($100mm, CA) for about $3.5mm in cash. Kearny FSB ($3.2B, NJ) will
acquire Atlas Bank ($110mm, NY) for an undisclosed sum. CapStar Bank ($1.1B, TN) will acquire the mortgage lending company Farmington Financial Group for an undisclosed sum. Farmington has about 30 employees. (What does one buy when a mortgage company is purchased? Unless there is servicing, can't the assets stroll out the door?)
Union Bank & Trust ($229mm, NC) will acquire a branch (plus certain
loans and deposits) from Southern Bank and Trust ($2.3B, NC) for an
undisclosed sum. Salisbury Bank and Trust ($585mm, CT) will acquire a
branch from Union Savings Bank ($2.4B, CT) for a 2.32% deposit premium.
And Pioneer Bank SSB ($251mm, TX) will acquire Union State Bank ($37mm,
TX) for an undisclosed sum.
three banks have been closed in 2014. Last Friday regulators closed
Syringa Bank ($153mm, ID) and sold it to Sunwest Bank ($673mm, CA) under
a purchase & assumption agreement. Sunwest gets 6 branches, all
deposits (excluding brokered) for a 0.75% premium and essentially all of
Citing regulatory burden and low profits, Cape Bank ($1.1B, NJ) said it has exited the residential mortgage loan business.
("Management also made the difficult decision to exit the residential
mortgage loan origination business. This had been an important business
segment for most of our 90 year history, but management believed changes
within the industry required a scale of operations that we would not be
able to profitably deliver. Further, we believe that exiting this
business segment will serve to improve Interest Rate Risk management and
we expect to realize a reduction in operating expenses in 2014.")
Bank won't be producing any more HMDA data. In fact, yesterday here in
Florida MBA president Dave Stevens reminded a crowd that HMDA reporting
institutions have dropped by about 1,000 in the last six years or so.
Recently a Capital Markets guy I know said to me, "What's the use of HMDA data if you can't parse it?"
Like most things in life nowadays, most questions lead you to some
website where you'll find the answer....that is, after you watch a few
videos of dogs chasing flashlights on YouTube. Although I have posted
the CFPB's 'Explore the Data' page in the past, a revisit to the site
this past week has revealed an expansion of filterable material,
including date ranges (currently '10-'12), by loan location, by purpose,
by lien, and even by lender ID (Don't have the lender ID? No problem,
the site contains an FFIEC tool to look up specific lenders). So if I
wanted to see how many FHA purchase, SFR loans in Pima County, Banco de
XYZ originated last year, I could. You can even display the data in a
custom summary table, download it into a .CSV format, or, your
customizable data set can be shared by link contained within an email. Who needs those huge binders anymore?
The CFPB released its latest Supervisory Report,
detailing issues and concerns uncovered through their supervision
program between July and October 2013. The CFPB also listed its various
supervisory actions taken in the time period covering the Report,
including consent decrees and penalties imposed for HDMA violations. The
Report further notes changes to the CFPB exam report template in order
to allow the Bureau to reduce the amount of time it takes to finalize
the report and provide them to supervised entities more efficiently. The
new template eliminates recommendations for currently satisfactory
processes, eliminates the list of CFPB team members participating in the
review and creates a single section in the report that includes all
items the entity is expected to address when a violation of law or
weakness in compliance management is discovered. Finally, the latest
Report summarizes the supervisory bulletins that CFPB has issued since
its last Supervisory Report.
As a reminder, the CFPB recently revised its examination procedures for servicing and originations.
The revisions update the CFPB's existing examination procedures to
reflect the new mortgage rules which became effective on January 10th. The revisions for mortgage servicing, and the revisions for mortgage originations can be accessed at those pages.
is a moderately big day for servicers depending on how prepared firms
will be once changes to settlement procedure requirements are rolled
out. Fannie Mae has released updates to its lender-placed insurance
requirements, which must be implemented by the June 1st deadline. Emily Ross of Bankers Advisory writes, "Servicers
must work with their lender-placed, or force-placed, insurance
providers to implement these changes by the required change date, but
are encouraged to do so before this date. Fannie Mae has adopted the definition used by the CFPB for Lender-Placed or Force-Placed Insurance." There are three changes with this update: (1) The first modification
prohibits the inclusion of servicer commission or other payments earned
by the servicer; meaning that the payments Fannie Mae makes, or
reimburses, must not include any incentive based pay for the servicer,
(2) Fannie Mae changed its requirements "to disallow servicers from using affiliated business for force-placed insurance," and
(3) Fannie Mae is now requiring servicers to file a lender-placed
certification with Fannie Mae attesting to their compliance with the two
previous rule modifications. The certification must be contained in the
Lender Record Information and can be filed with Form 582.
of Business and Consumer Services has adopted rules establishing the
process for accepting consumer finance licensing applications, renewals,
and administrative actions via the Nationwide Mortgage Licensing
System. These rule change take effect immediately, and can be found on
Oregon's Division of Finance and Corporate Securities website.
Arkansas has modified provisions regarding the state's Fair Mortgage Lending Act. On January 10, the Arkansas Securities Department finalized amendments
to certain sections of the rules that implement the Fair Mortgage
Lending Act. The regulations were amended to expand disclosure
requirements for new and transferred loans. The entire FMLA can be accessed here.
Let's see what is going on with some vendors, investors, and aggregators out there.
First off, Wells Fargo's sale of residential-mortgage servicing rights (MSRs) to Ocwen Financial is in limbo
after a New York State regulator has indefinitely halted the $2.7
billion deal. The person said the office of Benjamin Lawsky,
superintendent of New York's financial services department, has concerns
over Ocwen's ability to take on more loans. (Lawsky supervises
insurance companies in the state and all banks chartered by the state -
but there might be a jurisdictional issue given Ocwen's non- bank
status.) The Ocwen deal called for Wells to sell servicing rights on $39
billion in loans. There
are concerns in the industry about the level of capital non-bank
servicers should be required to have, which is a big deal since they
have been the ones making a market for servicing.
"Rob, what do you hear from Fenway Summer?" Funny you ask - Raj Date made headlines this week with plans to launch a subprime credit card. Per American Banker, "The
new card, to be issued through a partnership with an unnamed bank, is
thought to be the first entrant into the subprime card market in several
years." I have heard nothing about the company buying non-QM loans.
Darn - I knew that I should have started a risk management company instead of writing a daily commentary! First American Financial Corp., the second-largest U.S. title insurer, agreed to buy Interthinx Inc. from Verisk Analytics Inc.
for $155 million. ("Title insurers, which use their records and public
documents to verify a seller is a property's true owner and that it's
free from liens, have been expanding business with mortgage companies.
Fidelity National Financial Inc., the No. 1 title insurer, last month
completed the acquisition of Lender Processing Services Inc. for more
than $3 billion. Interthinx will help First American offer real estate
customers 'further assurances in areas that present risk, including
fraud, identity and income validation, collateral adequacy and
compliance,' Dennis Gilmore, chief executive officer of the insurer,
said in the statement.")
For those tired of starting the mortgage origination race from the same spot as everyone else, Paragon Global Resources,
an international relocation company with a portfolio of Fortune 500
companies as clients, has announced its intention of diversifying into a
more retail-oriented origination platform. Paragon
has been in the business of relocating employees for more than 20
years, but began originating for their own clients more than 10 years
ago through its subsidiary, GenEquity Mortgage. Opportunities are nationwide for producing branch managers, originators and even those looking for regional positions. GenEquity is currently licensed in 22 states; to learn more contact Louis Weber at Lweber@genequity.com.
Correspondent Lending announced changes to its VA IRRRL Program.
Effective on any VA IRRRL loan locked on or after February 10th, 2014: "The
following overlays will be in effect: all transactions will require an
AVM at the time of submission; we will allow a maximum LTV to 150%;
there will be a price adjustment if the transaction exceeds 125% LTV to
150% LTV. (See rate sheet for pricing adjustment.) CMG does not have an
exclusionary list for Vendors. Your AVM can be ordered through any HVCC
approved appraisal management company. A 2075 appraisal will be accepted
if an AVM is unavailable."
Effective immediately, BAML is
no longer ordering pre-borrower funding CDAs on behalf of lenders due
to the ECOA changes; instead, lenders will need to order their own CDA
and/or field review from Clear Capital, which is the current approved
addition, BAML will no longer review loan-level waiver requests on a
pre-borrower funding basis, and Lendermail will not discuss anything on a
had a spate of economic news yesterday, and rates crept a little
higher. Initial claims for jobless benefits decreased by 20,000 to
331,000 in the week ended Feb. 1, slightly lower than the 335,000
forecast. (The four-week moving average for claims, which evens out
bumpy week-to-week data, ticked up slightly to 334,000 from 333,750.)
The Trade deficit widened 12% to $38.7BB in December, more than
forecast. Non-Farm Productivity increased at a 3.2% annualized rate in
4Q13, stronger than the 2.8% forecast, and followed an upwardly revised
3.6% gain in 3Q. Challenger came out with its 2014 January Job Cut
Report saying that planned cuts were up 50%.
Reuters reported that "MBS volume was above normal with Tradeweb
reporting at 108 percent of the 30-day moving average" but we still have
originator supply totaling just over $1 billion while the Fed's buying
is averaging $2.48 billion per day. Agency MBS prices worsened about
.125 while the 10-year T-note was down .250 (2.70% yield). The BLS
employment report comes out this morning. Nonfarm Payroll is expected to
come out at +185k while the unemployment rate is projected unchanged at
6.7 percent. In the very early going we're unchanged from Thursday's close.