many statistics are showing us that things continue to pick up. But is
the economy doing as well as the Fed thinks it is? If it is, the
improvement is certainly not evident in the traditional sense, and the
gap between the haves and the have-nots continues to widen.
Family Dollar Stores announced that it will close 370 stores. Two weeks
ago Brookstone filed for bankruptcy protection. There were similar
moves by retailers Dots, Ashley Stewart, Sbarro and Quiznos. And last
week Sandpoint Idaho retailer Coldwater Creek, faced with declining
sales, annual losses, and mounting debt, filed for Chapter 11 bankruptcy
protection. Yet LVMH's stock is trading near its all-time highs.
What is LVMH? It is the company that owns Luis Vuitton, Dom Pérignon,
Domaine Chandon California, Hennessy, Moët & Chandon, Veuve
Clicquot, Dior, Donna Karan, Givenchy, Bulgari, Hublot, TAG Heuer, and
so on - luxury goods.
On the jobs and promotions front, the Freedom Mortgage Mini-Correspondent lending initiative has experienced remarkable growth over the last 2 years. The Freedom program can not only service lenders with existing warehouse lines, but can also help lenders facilitate new lines. New
lines are available from independent warehouse lenders designed to
serve the needs from the emerging broker to banker, up to the banker
that needs additional line capacity or simply better advance terms. To
meet the growing demand, Freedom Mortgage has expanded the functions of
Allen Middleman to VP, Regional Mini Correspondent Lending Manager for the Florida Region, Anne Broederdorf in the Western Region, Stacey Faul in the Midwest, and Jake Wilson
covering the East coast. "Freedom's Mini-C Regional Lending Managers
work with the local Freedom AEs, Regional Wholesale Managers and
Regional Ops Mangers to provide the very best Mini Correspondent service
in the market." To contact a representative in your region, email Allen.Middleman@FreedomMortgage. com , Anne.Broederdorf@FreedomMortgage. com , Stacey.Faul@FreedomMortgage. com, or Jake.Wilson@FreedomMortgage. com.
And Citibank, N.A. is strategically adding new correspondent sellers for delegated and non-delegated delivery.
"Citi offers competitive pricing with additional incentives for CRA
eligible loans. It also offers a thorough pre-purchase review process to
help improve quality manufacturing and delivery to Investors and
Agencies. A relationship-centric organization, all clients benefit from
the expertise, support and resources that Citi offers." For
consideration please complete the Prospective Mortgage Correspondent
The Fed's comments on housing last week were interesting. "Housing activity
remained slow over the intermeeting period. Although unfavorable weather
had contributed to the recent disappointing performance of housing, a
few participants suggested that last year's rise in mortgage interest rates might have produced a larger-than-expected reduction in home sales.
In addition, it was noted that the return of house prices to
more-normal levels could be damping the pace of the housing recovery,
and that home affordability has been reduced for some prospective
buyers. Slackening demand from institutional investors was cited as another factor behind the decline in home sales. Nonetheless, the
underlying fundamentals, including population growth and household
formation, were viewed as pointing to a continuing recovery of the
anyone remember Lehman Brothers? I do, they had some of the best
conference freebies out there. I think of them fondly every time I head
for the store and use my canvass LB tote bag to haul my groceries.
Unwinding the positions of Lehman has been a monumental challenge, and
it is only now that analysts have started to quantify the total losses.
The bankruptcy of Lehman Brothers and its 209 registered subsidiaries
was one of the largest and most complex in history, with more than $1
trillion of creditor claims in the United States alone, four bodies of
applicable U.S. laws, and insolvency proceedings that involved over
eighty international legal jurisdictions. The New York Federal Reserve
writes in Liberty Street Economics, "We
estimate the payout ratio to Lehman's creditors thus far to be about 28
percent on estimated allowable claims of more than $300 billion,
implying a loss to creditors and counterparties of more than $200
billion...We find that the recovery rate for LBHI creditors has been below
average so far-about 27 percent versus more than 55 percent
article, written by Michael Fleming and Asani Sarkar, concludes that the
difficulties associated with Lehman's resolution under Chapter 11
resulted in part from Lehman's lack of bankruptcy planning and in part
from the inherent complexity of Lehman's business and organizational
was recently doing a little mortgage related research and came across
an online article written in early 2007 by an equities analyst who
placed a "buy" on FNMA and FHLMC (along with Sears). I wonder if he ever
found his true calling in life. It's important to realize that markets,
and by extension the people who trade within its perimeters, are almost
as wrong, as they are right. I read a recent BAML article, A Mortgage Misunderstanding: GSE Moving Markets,
in which they address a common concern; market timers, and people
attempting to front run "what may" happen with respect to Fannie and
Freddie, are creating volatility. They write, "In our view, the Fannie
and Freddie situation, which encompasses not only the agency debt, MBS,
equity and preferred markets but also the housing market and the overall
economy, is now generating more headline risk and spread volatility as
markets oscillate between opposing possible outcomes. Our bottom-line
outlook is that the markets have overreacted recently to the possibility
of passing a new GSE bill this year."
Before we plunge into some agency and investor updates, it is important to keep in mind that the American Bankers Association released its 21st annual Real Estate Lending Survey.
"More than 80 percent of banks expect new mortgage regulations to
reduce mortgage credit availability - more than one-third of respondents
will only make qualified mortgage loans, while another one-third will
also make non-qualified mortgage loans but only to targeted markets or
products. 'The new mortgage rules are a serious challenge, especially in
the near term, for mortgage lending,' said Robert Davis, executive vice
president at the American Bankers Association. 'The problem will last
at least as long as bankers calibrate their compliance systems, and
perhaps much longer.'" (On the commercial side, things are okay:
commercial real estate loan demand is trending higher for 26 percent of
respondents, but remains stagnant for 51 percent. The delinquency rate
for commercial real estate loans remained little changed at 3.3 percent
in 2013.) And this will stun you: according to the survey, bankers are
most concerned about the increasing regulatory burden and compliance
cost. Click here for a complete report: 2014 ABA Real Estate Lending Survey.
Is the FHA going to bring back "spot loans?" Perhaps, much to the joy of many lenders out there. Here is the latest.
under the title of "oh well," Commissioner Galante made it clear that
the FHA will not be lowering the MIP in the near future, and that they
have included a lender paid fee in the 2014 budget that would raise up
to $30mm to help offset increased QC fees on FHA loans. She did say they
will be rolling out the Homeowners Armed With Knowledge (HAWK) program that will use consumer education to lower a borrower's MIP.
Congrats to Sharon Bitz who was recently appointed by Primary Capital Mortgage (PCM)
as its new VP, Western Region supporting Wholesale AEs as well as
broker and correspondent business partners. "An advocate of growth and
technology, Sharon joins PCM with more than 25 years of experience in
Wholesale Mortgage Lending and Sales Management. Most recently she held
the position of Senior Vice President, Wholesale Lending for
California's Western Bancorp.
And NFM Lending
announced that Jason Ponsonby will be NFM's Director of Sales and will
be a member of the Executive Team. As the Director of Sales, Jason will
be working with NFM branches throughout the country to increase
production and ensure branches are receiving the best service they can
from corporate. In addition, Jason will be assisting with branch
recruitment and development. With over 12 years of mortgage and
leadership experience, Jason brings a fresh look at helping NFM branches
perform at their highest level while providing excellent service to our
borrowers. If you'd like to reach Jason his e-mail is email@example.com.
360 Mortgage Group, LLC
announced the formal introduction of its Reverse Mortgage Division.
"The foundation of 360 Mortgage Reverse is an end-to-end reverse
mortgage processing platform for mortgage brokers, third party
originators, community banks and credit unions to originate reverse
The USA is apparently big enough for Carrington Holding Company LLC.
It recently announced its entry into the United Kingdom with the
purchase of Clear Financial Solutions Limited, a residential mortgage
brokerage firm in Scotland. Carrington will re-brand and operate the
company under the name Carrington Mortgage UK Limited.
Accurate Group Holdings, Inc. announced that the Archer
vendor management and compliance software platform is now fully
integrated with Ellie Mae's Encompass mortgage management solution,
allowing Ellie Mae's Encompass users access to Accurate's full suite of
national valuation and title solutions. "As a proprietary platform,
Archer drives the core of Accurate's technology service business model
by managing 25,000 third party vendors, streamlining workflow and
efficiently delivering data through the integration with Ellie Mae's
has updated its Power of Attorney policies to prohibit the use of POAs
on cash-out refinances or where the Attorney-in-Fact is an employee of
the lender, broker, title company, or realtor. Loans
that use the Statutory Form POA must have a copy of the Addendum for
Statutory Form Power of Attorney included in the file; this should also
be provided to the doc custodian. The
initial application for FHA and VA loans may not be executed using a
POA, and lenders are reminded that the VA requires the veteran's
signature on the sales contract.
For correspondents out there, Ditech Mortgage Corp.
announced that the minimum Borrower Investment requirement of 3% for a
Conforming one-unit primary residence with an LTV/CLTV greater than 80%
has been removed. All funds needed to complete the transaction can come
from a gift. This does not apply to High Balance or LP loans which still
require a minimum of 5% investment from borrowers own funds.
Radian Guaranty Inc. announced
the availability of additional training and resources to help customers
get familiar with its new Master Policy, anticipated to become
effective on July 1, 2014. Radian's 45-minute interactive webinars will
discuss what's new in the Master Policy including Radian's new
rescission relief offerings, and revised reporting requirements.
Participants will be able to get answers to their questions in real time
from Radian experts. Register for the webinars and view Radian's
training schedule here. Customers can also learn more about the new policy by visiting Radian's dedicated Master Policy webpage.
Turning to the markets, as
opposed to last week with little scheduled news to move bond prices
(and therefore rates), this week we have an abundance of titillating
numbers. We start off with today's Retail Sales. On Tuesday, April 15th (why does that date ring a bell?) we'll have Empire Manufacturing, the Consumer Price Index (CPI)
to measure the level of change in the average price of a fixed basket
of goods and services purchased by consumers, and the NAHB Housing
Market Index. On Wednesday we have Housing Starts
and Building Permits duo along with the Industrial Production and
Capacity Utilization couplet, with the Fed's Beige Book thrown in for
good measure. Every Thursday we have Initial Jobless Claims, and this
Thursday is no exception. We'll also have the Philadelphia Fed Index. Friday is Leading Economic Indicators.
numbers, our pal the risk-free 10-year T-note closed at a yield of
2.62%. In the very early going it is unchanged from Friday's close as
are agency MBS prices.