Recent Bank Mergers; Ugly News for Access National and Golden First; Thoughts on New Appraisers
Compensation is a sticky topic. For example, the Fed is pushing banks to ignore their rivals when setting bonuses for executives. There was a recent article regarding compensation for Consumer Direct lending, and the survey that the STRATMOR Group is conducting. Here is the article on Consumer Direct compensation. And lastly, if your company is not already, but would like to participate in the STRATMOR compensation survey, the survey is split into modules allowing you to choose your level of participation (Executive Management, Retail Sales, Consumer Direct Sales, Retail Fulfillment and Consumer Direct Fulfillment) and has several other bells and whistles. Have your HR person contact Nicole at Nicole.firstname.lastname@example.org.
Companies hiring need to know comp levels. Cole Taylor Mortgage (CTM) offering retail branch opportunities throughout the U.S. Originating loans in 41 states plus D.C., CTM is a division of Cole Taylor Bank, a Chicago-based commercial bank founded in 1929. It offers a choice between a "Net Revenue" and a "Storefront" branch model, the branch decides, along with centralized IT support, dedicated retail operations & training, and marketing services are provided at no cost. The complete product portfolio includes HARP 2.0 up to 175% LTV on primaries and second homes, and servicing is being retained on nearly 95% of its loans for borrower retention. Contact Mark Janssen, GSVP Retail at email@example.com for more info. Cole Taylor Mortgage is an Equal Housing Lender and Member FDIC. NMLS#493677.
If you know anyone in the mid-Atlantic region who is good at IT and interested in Secondary, here is something. I have been asked to assist a Maryland lender in its search for a Mortgage Project Analyst. This position will play a lead role in software conversion and act as a liaison for staff, customers and lines of business, learn all aspects of the software system and work with consultants and staff to implement software, and act as a system specialist to handle concerns and questions. The person will be involved in pipeline management- lock changes, extensions, renegotiations cancellations and relocks, help desk- answer scenario, pricing, lock and guideline questions. Preferred candidates will have a college degree and at least two to five years of similar or related experience. The lender closed over 4,000 units in 2012 with $1.5 billion in volume, and six of its LOs made Scotsman's top 200 originator list. Please send confidential inquires to me at firstname.lastname@example.org.
Friday the commentary mentioned a rumored exam of 360 Mortgage by the CFPB, and I received this note from management: "The CFPB has not contacted 360 Mortgage, and any rumor that the agency has is flatly incorrect. In the last 15 months, 360 Mortgage has undergone all of the standard mortgage industry reviews - including two with HUD, and one each with FNMA and GNMA, as well as 22 State audits - all with no significant findings. As part of today's mortgage industry environment, we, like all mortgage lenders, will be audited by the CFPB. 360 is fully compliant with all industry regulations, and we are confident we will pass a CFPB audit as well as any other state or agency audit. Should you have any questions, please contact Mark Greco at email@example.com. (And it was about a week ago that 360 Mortgage Group, announced that any owner occupied purchase with a minimum 740 FICO up to a maximum 95% LTV will have no MI. There is no price adjustment, no special program code and no other qualifiers.)
The plot thickens in the Access National branch closure story. Prior to the weekend Virginia-based Access National announced that it is closing its 38-person mortgage production office in Denver responsible for 41% of the company's fee income last year and 32% of its total profits. Why would Access National Corp. willingly walk away from a profitable mortgage? "Basically, we drop direct mail across the country, and people call in to refinance their mortgages," said CEO Mike Clarke. "It's almost exclusively for the FHA and VA streamlined refinancing program." But new regulations, put in place as part of the Dodd-Frank law on Wall Street reform, have changed the way those niche loans can be bought and sold, and the economics of servicing these loans has become very unattractive," Clarke said, and the institutions that have historically bought mortgage loans from Access National are pulling back significantly.
On Friday Access National's stock price dropped 21%. But it was revealed that Dean Hackemer, the president of Access National (ANCX) had sold $181,659 worth of his stock in nine transactions over the past four weeks. This is the first time Hackemer has sold stock since he became an insider in 2004, according to SEC filings. Granted, it amounted to 5% of his holdings, but his timing is raising some eyebrows since SEC rules make it illegal for a company's officers to buy or sell stock while in possession of material, nonpublic information. That would be insider trading. But anyone who does it will argue that it is merely good timing.
And the industry is watching the Department of Justice sue Golden First Mortgage, accusing it of defrauding the federal government into insuring poor quality home loans, thus costing taxpayers millions of dollars. According to the DoJ, Golden First certified that more than a thousand FHA loans were eligible for FHA insurance between 2002 and 2010 when it was known that the company's underwriters had failed to do their due diligence. The government said Golden First emphasized speed and volume over quality, paid kickbacks to employees to speed up loan approvals, and used just three people to close 100 to 200 loans a month, making adequate due diligence impossible.
The lawsuit seeks compensatory damages, triple damages and fines for Golden First, which operated in Great Neck on New York's Long Island. Not that it helps, but Golden First is in well-known company. Last year, Bank of America, Citigroup, and Deutsche Bank agreed to pay a respective $1 billion, $158.3 million and $202.3 million to resolve similar lawsuits, and Wells Fargo is seeking to dismiss a similar lawsuit. The Justice Department said the FHA has paid more than $12.3 million in insurance claims on Golden First loans since July 2007, and expects the amount to rise. The government accused Golden First of violating the federal False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989, and also of committing negligence and breach of fiduciary duty.
Are there companies interested in bringing new blood into the biz? Sure there are - AXIS is one. "Rob, your recent column on appraisers, and Mike Ousley's timely comments, touched on the topic of attracting new blood into the field of appraising. I think it's universally known that our industry has lost a significant percentage of practicing appraiser since 2007. Couple that with the greying of the appraiser work force (where the average age is estimated to be 57), the heightened regulatory barriers to entry and the shifting economics that have disenfranchised appraisal firms, and we have an industry in crisis. Are there solutions? Hopefully many - but here at AXIS, we've made a specific commitment to dedicate corporate resources to help in 'growing' a new generation of appraisers. We're working on teaming with the Real Estate Departments of several Colleges and Universities to develop an internship program that explores the opportunities in the appraisal field. We're partnering these interns with our senior staff appraisers who train and mentor them and provide them real time field experience. This is an opportunity to take some of the best and brightest students working toward a degree in real estate and expose them to the technical tools and elevated skills necessary to produce appraisal reports for the 21st century. Perhaps now what's needed are for others in our field to bring their new ideas and energy to bear on expanding the solutions for our industry." For more information on this program, contact Michael Simmons, SVP of Business Development, at firstname.lastname@example.org. Thanks Mike!
There is a heckuva lot going on with the depository bank side of things in recent weeks. KBW reports banks announced 42 M&A deals in the first quarter with an average price of 1.11x tangible book (up from 1.09x in Q4) versus 55 deals and 1.32x tangible book for the same period last year. US banks and thrifts closed 2,267 branches in 2012, according to SNL Financial, pushing the total number of branches to 93,000, the lowest level in 6 years. We also know that from 2006 through 2012, 468 banks & thrifts failed, including one Friday (regulators in Arizona closed Gold Canyon Bank - $45mm - and sold it to First Scottsdale Bank -$80mm.)
Fed research finds the number of commercial bank charters outstanding has declined by more than 50% since 1985. Who wants to start a new bank, or mortgage bank, now? The largest bank holding companies in the US (as of the end of 2012) were JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, MetLife, Morgan Stanley, US Bancorp, Bank of New York Mellon, and HSBC North America. The top 5 of these held about 49% of total industry assets, while the top 10 combined represented 64% of industry assets.
And lately we have seen a slew of bank mergers as owners seek to increase capital and leverage their compliance and legal staffs. Glacier Bancorp ($7.7B, MT) will buy North Cascades National Bank ($346mm, WA) for $29.3mm in cash and stock. Bryn Mawr Bank Corp ($2.0B, PA) will buy MidCoast Community Bancorp ($278mm, DE) for $33mm in stock. Investors Bancorp ($12.7B, NJ) will buy the holding company of GCF Bank ($310mm, NJ) for an undisclosed sum. Enterprise Bank & Trust ($3.3B, MO) will buy certain assets of Gorman & Gorman Home Loans for an undisclosed sum, as it seeks to expand its mortgage and wealth management businesses. Gorman is a unit of F&M Bank and Trust ($142mm, MO) and has originated more than $2.5B in mortgage loans since 2010. First Financial Corp ($2.9B, IN) will buy 7 branches and 2 drive up locations in IL ($252mm in deposits) from Bank of America for an undisclosed sum. 1st United Bancorp ($1.6B, FL) will buy Enterprise Bank of Florida ($233mm, FL) for about $6mm in cash, $24mm in nonperforming loans and $15mm in other impaired assets. Puget Sound Bank ($268mm, WA) will buy Core Business Bank ($64mm, WA) for $8.4mm in cash and stock. CorTrust Bank ($680mm, SD) will buy Blaine State Bank ($36mm, MN) for an undisclosed sum. The holding company for Provident Bank ($3.8B, NY) will buy the holding company of Sterling National Bank ($2.7B, NY) for $344mm in stock. And the holding company for Lake Sunapee Bank ($1.3B, NH) will buy the holding company of The Randolph National Bank ($170mm, VT) for $14.4mm in stock.
Those who follow the markets know that they often act like a spring, and any big move one way or the other may result in a pullback soon afterward as short-term profit taking occurs. Yesterday we saw exactly that, with most of the e-mails appearing to be investors making their prices worse, but woe to any capital markets folks buying back hedges Friday at the peak, only to have to sell them again yesterday as the market worsened. Forced pair-offs, unwanted renegotiations and blown locks are every lender's worst nightmares, and they all drive up hedging costs which are in turn passed on in the form of wider primary/secondary spreads for loan officers and borrowers.
By the end of the day Monday, 30-yr agency residential MBS were worse .375-.50 and the 10-yr. closed at a yield of 1.73%. This morning, in the early going, there is little discussion about anything that happened in Asia or Europe, and there is no scheduled news in this country. We do, however, have a 1PM Treasury auction of $32 billion 3yr notes, with 10s and 30s to follow on consecutive days. In the early going the 10-yr is sitting at 1.75% and MBS prices are roughly unchanged.
23 Adult Truths (part 1 of 2)
1 Sometimes I'll look down at my watch 3 consecutive times and still not know what time it is.
2. Nothing stinks more than that moment during an argument when you realize you're wrong.
3. I totally take back all those times I didn't want to nap when I was younger.
4. There is great need for a sarcasm font.
5. How the hell are you supposed to fold a fitted sheet?
6. Was learning cursive really necessary?
7. Map Quest really needs to start their directions on #5. I'm pretty sure I know how to get out of my neighborhood.
8. Obituaries would be a lot more interesting if they told you how the person died.
9. I can't remember the last time I wasn't at least kind-of-tired.
10. Bad decisions make good stories.
11. You never know when it will strike, but there comes a moment at work, or at home, when you know that you just aren't going to do anything productive for the rest of the day.
12. Can we all just agree to ignore whatever comes after Blue Ray? I don't want to have to restart my collection...again.