Zillow published an article indicating that low-income renters have moved away from living in rural, dense communities and into more affluent suburban areas that were adversely affected by the recession. Historically, low-income renters lived in rural, single-family residences and large multifamily units. However, this cohort is now more likely to live in low-rise, low-density, multifamily structures. About 36% of all U.S. households rent and more than 68% of low-income households in the U.S. are renters. Renters are also three times more likely than homeowners to have low incomes and in 2013, roughly 26% of renter-occupied households had low incomes as opposed to 9% of owner-occupied households.

I received a note from PHH's Dico Akseraylian, SVP, saying, "Your newsletter stated that 'PHH Mortgage has made a big shift from correspondent into retail and opening six new retail sales centers throughout the country.' This statement is not accurate. PHH's recent press release announcing the opening of new retail centers is not connected to our focus on correspondent lending. As stated in the release, our retail expansion strategy complements our existing businesses, real estate, private label and correspondent lending - does not replace it or indicate a shift away from those segments. We are committed to originating high quality loans from our Correspondent clients. Further, Amy Costa, a 23-year PHH veteran, was appointed to the role of Managing Director of Correspondent Lending and Regional Financial Institutions (i.e. regional & community banks and credit unions) with a focus on disciplined growth in these segments." Thanks Dico!

Following the story on "Super Lien States, VA Loans and HOAs" (2/11/15), I heard from Jason Tufaro, VP of Business Development with MMREM, a company that has done a great deal of work with HOAs over the last several years. MMREM subsidiary Sperlonga was formed in 2011 to work with servicers, lenders and HOAs to identify HOA risks and mitigate them by taking a proactive approach to alleviate any issues regarding loss of lien position.

Jason noted, "In our experience and conversations in the industry, we do not believe HOAs will subordinate to VA in super lien states and forego their super lien status. Although there is a fear that VA will no longer lend on HOA properties in super lien areas, the flip side of that equation is that super lien states with a high proportion of HOAs are also high volume origination areas for VA, such as Nevada, Florida, Arizona, Illinois, and Washington, D.C. We don't believe VA will sacrifice that much loan volume in super lien states because of HOA lien fears. With more states looking to adopt super lien status, the VA may be looking to the federal government for an exemption when dealing with HOAs, but this struggle has gone on for years and will continue until it is resolved. 

"Since the recent ruling in Nevada, HOAs in super lien states have become more and more aggressive when it comes to delinquent assessments. These HOAs have been successful in utilizing their super lien status to recoup funds by foreclosing on properties that are severely delinquent. 

"The ideal solution is to resolve delinquencies before they lead to liens in the first place. Our approach allows originators to identify HOAs and gather contact info, as well as assessment amount and frequency, which makes it easier to underwrite a loan with the most up to date and accurate information. Servicers and sub-servicers utilize our HOA Assessment Surveillance (HAS) service to track and monitor HOA delinquencies in their portfolios. Once a delinquency is reported systems can alert the client so that proper actions can be taken to ensure that the HOA assessments are either brought current or, at the least, a dialogue opens between the HOA and the servicer.  

"Our experience has shown us that lines of communication are critically important in making sure liens don't become an issue, particularly in super lien states where real danger exists of losing first lien position to HOA foreclosures. At the end of the day, the associations simply want to be paid what they are owed and servicers want to fulfill their obligations on behalf of their investors. Up until 2011, there was no bridge to connect the divide, but fortunately that is changing." Thanks Jason!

Don't think the decline in oil pricing is hurting parts of the economy? Think again. Many companies are shedding employees as low oil prices force energy companies to rein in spending. I am in North Dakota and yesterday drove out to Dickinson, a hub in the oil patch. Frankly things seemed a little quiet...

Recently on my local news the reporter was talking with someone filling up their car at a gas station, when the man said, "gas prices don't really affect me....I only buy $30 each time I need gas." I think he was joking....but then again, it takes all kinds. The first time the pump clicked off without charging my credit card $80, a few months ago, I honestly thought there was something wrong with the gas gauge on my car; prices are noticeably lower, and as noted in the commentary recently, state income as measured in Gross State Product, has fallen in a handful of states. When profits start to fall in any sector there's usually two sure things: no more flavored coffee in the break room, and layoffs are sure to come. Wells Fargo is forecasting this trend. "In dollar terms, Texas is likely to suffer the largest loss. The Lone Star State has by far the largest number of workers in each of the oil- and gas-related industries. However, it does not have the highest concentration of those workers as the state is relatively large and diverse economically. In Texas, only 2.6 percent of workers are employed in oil and gas extraction...By contrast, 6.0 percent of North Dakota's workers are employed in those three industries, while 5.8 percent of workers in Wyoming are concentrated there." Diversification is typically a good thing, something lacking in Alaska, Oklahoma, New Mexico and Louisiana, which all have a higher concentration of oil and gas workers than Texas. When employment data is released later this year, contraction in state gas and oil employment is expected.

Oil prices appear to be stabilizing and that's good for U.S. mortgage markets. Recently Jody Shenn of Bloomberg writes, "Bank of America Corp., which had been warning investors to avoid U.S. government-backed mortgage securities, reversed its call this week. The reason: oil prices are stabilizing." Yes, oil prices have been falling for over six months, culminating to a seven-year low. The selloff in oil is helping to shrink inflation expectations with people who follow such things (that would be everyone who isn't living off-grid in Alaska, by the way). Ms. Shenn continues, "The 10-year Treasury yields dropped to 1.64 percent from 2.17 percent at the start of the year. Average rates on typical new 30-year mortgages dropped to 3.59 percent in the last week, the lowest since May 2013, according to Freddie Mac surveys. With rates lower, refinancing applications from borrowers soared 84 percent in the last three weeks of January compared with the seasonally adjusted average last year, according to Mortgage Bankers Association data."

Fortunately rates have been relatively stable, moving up a little or down a little, perhaps indicative that there hasn't been much dramatic news from Asia, Russia, or Europe to move the fixed income markets. And we certainly had plenty of potentially rate-moving news Thursday. The Consumer Price Index fell .7% in January - mostly due to energy. (The gasoline decrease was overwhelmingly the cause of the decline in the all items index, which would have been +.1% had the gasoline index been unchanged.) Durable Goods were +2.8% in January, the first increase in three months. Initial Jobless Claims jumped 31k to 313k and the 4-week moving average was 294,500, an increase of 11,500 from the previous week's revised average.

In housing news, the FHFA House Price Index was +1.4% in the fourth quarter 2014.  This is the fourteenth consecutive quarterly price increase in the purchase-only, seasonally adjusted index. FHFA's seasonally adjusted monthly index for December was up 0.8 percent from November. (The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.)

But rates rose slightly Thursday with the move attributed to a weak 7-yr Treasury note auction and rallying European Union bonds. The 10-yr closed at 2.02% and current coupon agency products worsening between .125-.250.

And we've had some news today. Real GDP - the preliminary number for the 4th quarter of 2014 came out at +2.2% - all of the components were roughly as expected. Core PCE was +1.1%. Later we will have the Chicago Purchasing Manager's Index and the University of Michigan's sentiment index for February (98.1 last) and January Pending Home Sales which is expected improved from the last -3.7% result. These rarely move rates, however, and in the early going we find the 10-yr at 2.03% and agency MBS prices roughly unchanged from Thursday afternoon as lenders are busy closing January locks.

 

Jobs and Announcements

Turning to the jobs market, in the Southeast Assurance Financial Group, a full-service regional mortgage banker headquartered in Baton Rouge, Louisiana, is growing its retail branch network by adding Paul M. Peters, CMB, as Sales RecrAXuiting Manager. Paul is a seasoned mortgage veteran with over 35 years of mortgage banking and sales experience. Assurance is actively identifying, recruiting and hiring talented branch managers, loan originators, and branch teams and focusing on Louisiana, Arkansas, Texas, Mississippi, Tennessee, Alabama, Florida and Georgia. Assurance has continued to expand by offering industry-leading compensation packages, exceptional lending support and professional growth opportunities, all focused on generating an increasing volume of quality loan originations.  Please contact Paul Peters to hear more about these opportunities. 

In the recent quarterly list of Inside Mortgage Finance's Top Mortgage Players, BOK Financial Correspondent Mortgage Lending joined the "Top 25" correspondent investors in the U.S.

"In less than three years from its launch, the division of BOK Financial Mortgage is now among banks like Chase, Wells Fargo and U.S. Bank Home Mortgage. A notable accomplishment, given management's level of selectivity with the banks and credit unions they choose to engage with and that their competitors also purchase loans from independent mortgage companies, where BOK does not. They attribute their success due to a focused, relationship-based approach on the bank and credit union segments by delivering solutions to meet their needs and the needs of their borrowers. For 2015, Correspondent Lending is continuing to focus on growth through partnering with the right bank and credit union partners. For more information on BOKF Correspondent Mortgage Lending, contact Client Relations at ClientRelations@bokf. com.

Mountain West Financial, a seasoned company with 25 years of experience, is looking for a Regional VP of production in the Orange County and Los Angeles area of Southern California. Also, they are expanding into Oregon, Washington, Nevada, Arizona, and Colorado and are searching for AEs, Regionals, and Retail Managers. "If you have expertise in these areas and are looking for a great company to build your career with, MWF is where you want to be. We are approved with FNMA, FHLMC, and GNMA and offer a variety of non-agency products. What really sets us apart is our expertise in purchase money loans, efficient turn times, robust marketing tools and unbeatable customer service, They have been listed on The Scotsman Guide for 'Top Mortgage Lenders' as well as '50 Best Companies to Work For' by Mortgage Executive Magazine." Contact John Cady at (951) 453-6442 for a confidential interview.

A quick but heartfelt congrats to David Neylan, whom Guild Mortgage announced will be leading its Financial Institution Services (FIS) Group to leverage its strengths as an independent mortgage banking company and offer complete outsourced mortgage services to regional banks, community banks and credit unions. And Digital Risk, one of the nation's largest independent providers of risk management, has named Blane Bauch to the company's executive team: Executive Vice President of Enterprise Sales.