Fun with government numbers: approximately
52.2 million people in the U.S. participated in major means-tested
government assistance programs each month in 2012, according to a U.S. Census Bureau report.
Right or left, Democrat or Republican....yes, Libertarians, too!
Participation rates were highest for Medicaid (15.3%) and the
"Supplemental Nutrition Assistance Program," formerly known as the food
stamp program (13.4%). Those under 18 were more likely to receive
means-tested benefits than all other age groups. In an average month, 39
percent of children received some type of means-tested benefit,
compared with 17 percent of people age 18 to 64 and 13 percent of people
65 and older. As an armchair economist it would be interesting to
compare these numbers to, say, twenty-five years ago.
Anyone
pushing bi-weekly mortgages should know that Paymap Inc., a payment
processor that is part of Western Union, and LoanCare, a mortgage
servicer that serves as a subservicer for ServiceLink (which is
majority-controlled by Fidelity National Financial), were cited by the
CFPB
for wrongfully promising "tens of thousands of dollars in interest
savings" to consumers if they made more frequent mortgage payments.
(LoanCare is a mortgage servicing subsidiary of ServiceLink. ServiceLink
is a majority-owned subsidiary of Fidelity National Financial. Black
Knight Financial Services is also a majority-owned subsidiary of
Fidelity National Financial, but is otherwise unaffiliated with
ServiceLink and LoanCare.) The Consumer Financial Protection Bureau is charging two companies
more than $38 million in total charges for allegedly steering consumers
into a mortgage payment program that cost them millions of dollars in
fees. The "Equity Accelerator Program" deducted automatic payments for a
mortgage on behalf of the consumer, but also typically charged a $295
enrollment fee as well as a $2.50 transaction fee for each debited
payment. As a result, about 125,000 consumers paid more than $33 million
in fees since July 2011, the CFPB said.
Colorado-based
Paymap has agreed to return $33.4 million in fees to affected consumers
and pay a $5 million civil penalty, while LoanCare in Virginia has
agreed to pay a $100,000 penalty. Both companies have agreed to the order without confirming or denying the allegations. While
there are many companies that offer borrowers the option to lower their
interest rate costs by making biweekly, or more frequent mortgage
payments, the CFPB said the named companies did not actually make those
mortgage payments. Instead, it held the payments until it was due within
the typical monthly period and then charged a transaction fee.
In banking news, a Financial Stability Board requirement that the world's biggest banks hold enough liquid assets to cover up to 20% of liabilities
is set to be completed by the end of September. The rule is necessary
to end "too big to fail" banks, Chairman Mark Carney says.
Certainly bank M&A announcements continued
as the reasons to merge and acquire continue to outweigh the drawbacks.
(And there certainly aren't many new banks being formed.) Just in the
last week we learned that Southern States Bank ($340mm, AL) went across
the border and will acquire Columbus Community Bank ($122mm, GA) for
$21.4mm in cash. In neighboring Florida Harbor Community Bank ($1.3B)
will acquire Florida Citizens Bank ($231mm). Missouri's First State
Community Bank ($1.8B) will acquire Central Bank ($264mm). HomeTrust
Bank ($2.6B, NC) said it will consolidate 6 branches in NC and TN, as it
seeks to reduce operating expenses and adapts its physical network to
address shifting customer banking preferences toward mobile and online
technology services. In Mississippi, Planters Bank & Trust Company
($855mm) will acquire Covenant Bank ($222mm). First Financial Bank
($7.3B, OH) will acquire Oak Street Holdings (Oak Street makes
commission-based loans to insurance agents and brokers). In Texas
Independent Bank ($4.3B) will acquire Grand Bank ($576mm) for $80.1mm in
cash (30%) and stock (70%). In Illinois Union Federal Savings and Loan
Association ($108mm) will acquire First Federal Savings and Loan
Association of Kewanee ($64mm, IL). And east of me, in California,
Suncrest Bank ($195mm) will acquire Sutter Community Bank ($66mm) for
about $9.4mm in stock (100%).
In a move sure to turn some heads, Prospect
Mortgage, LLC, and known for its purchase business lending, announced
its decision to discontinue marketing activities that depend on
Marketing Services Agreements (MSAs). Prospect expects this action
to be complete by the end of the third quarter. "Recent interpretations
of RESPA requirements introduce substantial uncertainty as to the rules
and requirements applicable to MSAs. Prospect has taken every precaution
to ensure that it is complying with the rules and guidance under
applicable law. However, in light of these recent rulings, Prospect
believes that MSAs are no longer a viable marketing tool for the
industry."
The
news came as rumors of Wells Fargo, Bank of America, and Cornerstone
making similar moves in similar business channels increased.
Doug Long, Prospect's President of National Lending, stated "We have
worked very hard at Prospect to establish strategic priorities for the
company that will allow us to succeed in this new era for our business.
Prospect prides itself on our commitment to providing the highest level
of customer service. We provide value to our customers through our
ability to offer a broad array of products and the deep industry
knowledge of our professionals. Given the uncertainty surrounding the
use of MSAs, Prospect has made the decision to discontinue marketing
activities that depend on these agreements. This decision has no impact
on our continuing efforts and commitment to deliver the highest level of
value and service to our customers and clients."
In better news, at least for some lenders, J.D. Power Reports released its customer satisfaction report headlined
by, "Mortgage Servicers' Focus on At-Risk Customers Negatively Impacts
Mortgage Experience of Majority of Other Borrowers." Quicken
Loans ranked highest in its Primary Mortgage Servicer Satisfaction for a
second consecutive year. The report notes that "mortgage servicers are spending a disproportionate amount of time and resources on at-risk customers,
compared with customers who are current with their payment, adversely
impacting satisfaction for the majority of their customers." You can
check the report out at 2015 U.S. Primary Mortgage Servicer Satisfaction Study.
"At-risk
customers-those currently behind in their mortgage payments or
concerned about keeping current during the next year-represent only 15
percent of the survey respondent pool. Despite being a relatively small
percentage of the total population, this group has been a primary focus
of such regulatory agencies as the Consumer Financial Protection Bureau
(CFPB) and the Government Sponsored Enterprises-Fannie Mae and Freddie
Mac (GSEs)-that own or guarantee the majority of conforming home loans.
Mortgage servicers consider their primary 'customers' to be the owner of
the loan (i.e., GSEs and Investors) rather than the end borrower, who
has limited power to decide which mortgage company services their loan."
Servicers
weren't surprised to read, "...when customers aren't able to resolve
their issue completely via the website, 67 percent ultimately turn to a
live agent to resolve the issue, which increases both the cost and the
negative impact on satisfaction. An additional 14 percent of customers
give up trying to resolve their issue with the company altogether, which
might give them the impetus to turn to the CFPB or other regulatory
agencies."
Turning
to the markets, I still have the silver dimes and quarters I'd
accumulated in the 1960's from bank tellers. But now they are worth
less. How are falling commodity prices going to affect near-term inflation?
Slow global growth is a big reason why many commodities have taken a
spill along with over-supplied markets - who is a natural buyer of gold?
The Bloomberg industrial index has fallen about 25% over the last year
as growth in China, which consumes the largest amount of metals in the
world, continues to slow. WTI oil has dropped 20% over the past month
due to over supplied markets and the Iran deal that would boost global
supply. Every aspect of agricultural commodities except corn has all
moved down in the past month.
Taking
all of this into account, the CRB commodity index has fallen almost 18%
since May 2014. Now how does this affect inflation? Wells Fargo found
that a 10% drop in the CRB index, if sustained, would shave 0.4% points
off the year-over-year rate of consumer price inflation. However, with
core inflation there isn't much to worry about; a 10% drop in CRB index
would only affect core inflation by 0.1% points. Since the Fed tends to
focus more on the core inflation, this is little cause for concern.
Yesterday
the lack of volatility in the bond market continued - in spite of a
strong 5-year note auction and the usual announcement after the Fed
meeting. The National Association of Realtors' Pending Home Sales Index
fell 1.8% in June and May was revised to +0.6% from 0.9%. Regarding the
Federal Open Market Committee..."The Committee continues to see the risks
to the outlook for economic activity and the labor market as nearly
balanced. Inflation is anticipated to remain near its recent low level
in the near term, but the Committee expects inflation to rise gradually
toward 2 percent..." The 10-year note yield backed up to 2.29% from 2.25%.
I
am in Honolulu attending the MBAH State Conference, so it is dark and
early. This morning we've had Initial Jobless Claims for the week ending
7/25 (up 12k to 267k) and more importantly the first look at GDP for
the 2nd quarter. Consensus thought we'd see 2.6% growth from -0.2% in Q1, and it was +2.3% while the 1st quarter was revised higher to +.6%. Later on is a $29 billion 7-year note auction. After the GDP news the 2-year yield hit a multi-year high, the 10-year is up to 2.31% with agency MBS prices worse .125-.250.
Jobs and Announcements
In jobs & expansion news, Pulte
Mortgage has openings for loan originators, loan processors, DE
underwriters, and a VP, Regional Service Center Manager (Processing
Manager), all part of the growth of its Denver headquarters operation. "Find out what it's like to work at the 2015 Winner of Colorado's Best Places to Work -
Pulte Mortgage - as voted by its own, long-tenured employees! PMC is a
wholly owned subsidiary of PulteGroup, a Fortune 500 company, and has
been a proven leader in the mortgage industry for over 42 years. We
focus on a total rewards package with high base salaries, competitive
monthly incentives, stellar, top level benefits, a fully vested 401k
match, tuition reimbursement and much more! You can send your resume or
your referrals' resumes to PMResumes@pulte. com or visit our website.
Hamilton Group Funding, a rapidly growing mortgage banking firm headquartered in the Fort Lauderdale, FL area, is seeking experienced underwriters
proficient in conventional, FHA/VA and USDA mortgages. While employment
in the home office is preferable, the company has 35 offices in 11
states, and is open to a remote location. Hamilton has a strong management team, award-winning technology, and competitive compensation with full benefits. Inquiries should be made to Amanda Smith.
Colonial National Mortgage is growing, and is hiring for a wide range of operations and production jobs.
It is hiring newly created key positions including a Technology &
Process Improvement Manager (to lead the new LOS implementation), a
BSA/AML Compliance Manager (ACAMS Certification preferred), a Business
Process Analyst - Mortgage Operations; and a Business Support Manager -
Servicing at its Fort Worth headquarters. Their CU Members Mortgage
division is seeking Mortgage Loan Officers in Phoenix, Bremerton (WA),
Newport Beach (CA), Las Vegas, and Dallas. And its Retail division,
Colonial National Mortgage, is looking nationwide for the best of the
best Loan Officers. Founded
in 1952, the company has $1 billion in assets and is privately held by
choice to ensure our focus remains on our customers and not the
expectations of Wall Street. Colonial is rated "Five Stars - Highly
Recommended" as one of the strongest financial institutions in the
country by Bauer Financial, and has earned Fannie Mae's Four STAR award
for customer service and foreclosure prevention, as well
as the highest achieving STAR Performer for best practices in General
Servicing, Collections/Loss Mitigation and Neighborhood Stabilization in
2014. Visit the Colonial Careers Page. (Equal Opportunity Employer, M/F/Disability/Vet.)
Unfortunately for the industry we learned that Cornerstone Mortgage, Inc.'s
President and CEO, James E. Dean, passed away on July 24. Co-Founder,
Senior Vice President and Chief Operating Officer, Angi Stevenson has
appointed Brad Bradford, as Senior Vice President.