is so sad that America ranks 25th in the world in math. But at least
we're still in the top 10. Speaking of math, the Census Bureau tells us
that the wealthiest 10% of American households own 80% of all US stocks (12.1 million households out of 121 million). Since
the total market capitalization of the US stock market is roughly $23
trillion, it suggests that $18.4 trillion of stocks is owned by just
12.1 million households or an average of $1.5 million of equities for
every wealthy household.
last time I used a travel agent was in 1986, when I was grappling with
five weeks through the South Pacific (including New Guinea). The travel
agent occupation has suffered due to computers, the internet, and
consumers going directly to the carrier. Is the LO occupation at risk?
Does a company like Bank of America or Wells Fargo really need 8-10,000
of them - each? One can make that argument, and this article mentions
LOs specifically. Don't shoot the messenger.
been said that living in major metropolitan areas isn't easy; as one
person I know who lives in the heart of San Francisco put it, "you have
to want to live here, nothing is easy; from parking to buying groceries,
it's always difficult." It's a life-style choice for sure, one which
can exclude home ownership, especially for first time buyers who face
median home prices in SF of $925k. However, San Francisco recently announced a program to promote homeownership within the city limits - DAPs are not dead,
and open doors for would-be transplants. The city is now willing to
lend certain first-time home buyers up to $200,000 toward the down
payment on their first house or condominium. SF Gate writes, "The
program provides down-payment help in the form of a loan to first-time
buyers of market-rate homes who make up to 120 percent of the area's
median income. The city runs similar programs for people buying
below-market-rate homes and for others such as police officers and
firefighters." When the homeowner sells or refinances, the loan has
to be paid off along with a percentage of the property's appreciation,
depending on how much of the purchase price the city covered. I left my heart in San Francisco.
it is San Francisco, or Phoenix, or Miami, there are plenty of rentals
out there. Reuters has an article on securitizing rental properties: a
potential Colony Capital securitization
of single-family rental properties. Colony Financial owns approximately
25% of the equity in Colony American Homes, which comprises
approximately 33% of CLNY's equity. Many analysts view securitization as
a positive catalyst as it provides a source of low-cost capital and
mechanism for investors to "get credit for" home price appreciation. For
example, assuming a 6% unlevered cash flow yield, we believe returns on
equity could exceed 15% (depending on execution, including the advance
rate and cost of funds). This would be the second such securitization in
the sector following Blackstone's Invitation Homes securitization in
October, which was well-received. According to the article, JP Morgan
and Credit Suisse may begin marketing approximately $500 million of
securities today and into next week.
know a lot of workers around the country are blocked from watching
YouTube videos while at work. While the temptation is too great for some
not to watch funny scared cat videos, the rest of us use the medium for its intended purpose: to keep abreast of CFPB field hearings and bureau educational videos. The CFPB's page currently has over seventy videos
ranging from introductory compliance videos, to messages from Director
Cordray. Next thing you know the Bureau will have its own twitter account. Here you go: CFPB YouTube Page.
Generally, 'open source'
refers to a computer program in which the source code is available to
the general public for use and/or modification from its original design.
Contrary to programs you may purchase and run on your desktop, which
are normally 'closed source', 'open source' software is at the opposite
end of the spectrum. The source code is included with the compiled
version and modification or customization is actually encouraged (Linux
operating system is an example of open source). I bring this up due in
large part because the CFPB has published open source code to allow lenders to integrate the web-based tool into lender applications or websites, in the hopes banks will build and customize web-based tools for consumer use. Ballard Spahr writes, "In
the press release, the CFPB notes that the web-based tool can be used
to find the 10 closest HUD-approved housing counselors to a consumer's
location and print or save the results...Also, the press release states
that lenders can use the tool to comply with housing counseling
requirements under Dodd-Frank." As Ballard points out, it is unclear
at the moment whether using this tool would bring about compliance, or
"safe harbor", for lenders who utilize the source code to build the tool
into their websites or applications. The CFPB on GitHub.
As a reminder, the
CFPB announced it will begin the rulemaking process for changes to the
reporting requirements under the Home Mortgage Disclosure Act (HMDA).
The agency will assemble a Small Business Review Panel, seeking early
feedback on ways to improve HMDA requirements; however, early-on, it is
apparent that HMDA data will ultimately become a greater area of focus
with regulators in the future. The announcement included possible
changes to the following areas: making lenders report information that
will help regulators gauge access to credit in the mortgage market
(explaining rejected loan apps, whether the lender considered the loan
to be a Qualified Mortgage, borrower's
DTI); requiring lenders to report additional information that can alert
regulators to problems in the industry (length of the loan, total
points and fees, length of any teaser or introductory interest rate,
applicant or borrower's age and credit score); requiring financial
institutions to report additional underwriting and pricing information;
streamlining HMDA reporting to align with existing data collection
methods already used by the mortgage industry to collect information on
processing, underwriting, loan pricing, and secondary market sales. Official CFPB HMDA site.
of folks in the industry are waiting for the CFPB to level financial
penalties on originators, since they, in simple terms, are viewed as
being responsible for their company's compensation plans. As a reminder,
back in December, the CFPB ordered GE CareCredit to refund $34.1M for deceptive health-care credit card enrollments.
CareCredit offers personal lines of credit for health-care services,
including dental, cosmetic, vision, and veterinary care. So who is the
primary driver of this finance, you ask? Well, doctor and dentist
offices, of course...Timeo Danaos et dona ferentes. Currently, the product
is sold by more than 175k enrolled providers across the country, and
there are approximately 4 million active cardholders. According to the
CFPB, roughly 85 percent of CareCredit borrowers were placed in a
deferred-interest financing plan. Under this "no interest if paid in
full" plan, consumers make monthly payments while CareCredit assesses
26.99 percent annual interest on a consumer's balance throughout a
promotional period, which can range from six to 24 months. If any
portion of the balance has not been paid when the promotional period
ends, the consumer becomes liable for all of the accrued interest. The
bureau claims that such lending programs, have deceptive enrollment
processes, inadequate disclosures, and poorly trained staffs. So the
CFPB, keeping in-line with their belief that an educated consumer
creates low market volatility (ok I just made that up, but it's not too
far off) has posted "What's the deal with health care credit cards?"
Four things you should know.
I am fortunate enough to do a little speaking at various conferences, and one is coming up in a couple weeks - time flies. The WMBA Wisconsin Mortgage Bankers Conference is April 2nd. There is quite a lineup of speakers at this conference,
including Governor Scott Walker, the Midwest Regional management from
the CFPB, and Bill Cosgrove, Chairman-elect of the MBA. Many of the
state associations are working more closely with the National MBA which
is improving their representation on both national and state issues.
(Speaking of Wisconsin, Inlanta Mortgage in Brookfield, Wisconsin, continues to expand its partner offices.
It seems the partnership platform is a solid alternative for
entrepreneurial mortgage bankers/brokers to avoid duplication in
operations/ compliance expenses and improve net income).
Strafford, a national provider of CLE/CPE webinars, will be conducting a program entitled Mortgage and Consumer Lending: Defending Disparate Impact Claims Amid Aggressive Regulatory Enforcement
on April 17, 1PM EST. Phil Stein with Bilzin Sumberg in Miami will be a
panelist, so should be worthwhile. Here is the program.
Plaza Home Mortgage's Successful Selling to the Realtor Market
seminars are coming to Ohio, Missouri, Texas and Utah in March and
April. During each comprehensive 3-hour seminar, discover how to get
5-10 quality Realtor relationships for 2014. Each course will cover 5
key areas to a successful sales strategy.
Sliding over to the markets, it is becoming harder to argue that the jobs market is flailing. The
number of Americans filing applications for unemployment benefits held
last week near the lowest level in almost four months, a sign the labor
market continues to strengthen. That was enough to push rates higher,
and agency MBS prices were pressured most of the day. Analysts continued
to ruminate, and act on, thoughts that Fed Chair Yellen saying rate
hikes could start six months after the end of QE. That is quite a shift
from today's environment in which the New York Federal Reserve Bank is
buying $2.16 billion per day of agency MBS.
numbers, agency MBS prices were worse than Wednesday by about .125; the
yield on the U.S. 10-yr T-note ended Thursday at 2.77%. While the
Malaysian airplane disappearance is setting records for a news story
that has no news, not much happened overnight in the financial markets. In the early going we're unchanged from Thursday's closing levels.