Ah yes, it's almost that time of year again when the first "Back to School Sale" signs start going up; children everywhere get that 'time is running out' look on their faces...and parents get that 'thank God' look on theirs. It is August, and summertime will be winding down and vacations will be coming to an end, signaling that back-to-school time is near. The U. S. Census Bureau has done some statistical analysis on the issue. Here's a good one: $8.6 billion is the estimated amount of money spent at family clothing stores in August 2013. Sales at bookstores in August 2013 were estimated at $1.6 billion (if you remember college bookstores, the same books will be sold back at a considerable discount...leaving liberal art majors to take over the cafeteria in protest, and economics majors to think about secondary market opportunities); the number of children and adults enrolled in school throughout the country in October 2012 was 78 million. $82,720 is the average earnings of full-time, year-round workers 18 and older with an advanced degree (bachelor's degree or higher) in 2012. Workers whose highest degree was a bachelor's had mean earnings of $70,432. Mean earnings for full-time, year-round workers with a high school diploma (includes GED certificate) was $41,248, while workers with less than a ninth grade education had $26,679 average earnings.

What's the week without some mergers and acquisitions? KBW announced that Independent Bank Corp., parent of Rockland Trust Company, and Peoples Federal Bancshares, Inc., parent of Peoples Federal Savings Bank, announced they will be merging. And here's another one: Peoples Bancorp Inc., parent company of Peoples Bank, National Association, and NB&T Financial Group, Inc., the parent company of Wilmington, Ohio-based The National Bank and Trust Company ("NB&T"), also plan to join up. Friend Bank ($70mm, AL) will acquire City Bank of Hartford ($55mm, AL). In Florida First Commerce Credit Union ($407mm) will acquire First National Bank of Crestview ($89mm). In Kansas TriCentury Bank ($4mm) will acquire 2 branches from Equity Bank ($1.2B). Bank of the Ozarks ($5.0B, AR) will acquire Intervest National Bank ($1.6B, NY) for $228.5mm in stock or about 1.1x tangible book. Alloya Corporate Federal Credit Union ($2.9B, IL) will acquire System United Corporate Federal Credit Union ($995mm, CO). FHLB Des Moines ($82.2B in assets and 1,500 members) is reportedly exploring merging with or acquiring FHLB Seattle ($36.5B in assets and 330 members).

Centennial Bank ($6.8B, AR) will acquire Broward Bank of Commerce ($172mm, FL) and Exchange Bank ($518mm, NE) will acquire The First National Bank and Trust Company of Junction City ($112mm, KS). And Old National Bank ($9.4B, IN) will acquire Founders Bank & Trust ($466mm, MI).

Why is it that every week banks and other lenders announce plans to merge? For banks, most seek to merge to capture more customers, geography, or product lines. This boosts market share and usually adds assets. After the event, back office functions are consolidated, redundant staffing is eliminated, and efficiencies are squeezed out to get more value. In theory this all works to improve performance. But the reality is that sometimes it does, and sometimes it doesn't. Why don't mergers work? Reasons vary with each deal, but for sure mergers "upset the apple cart" for employees and customers alike. This can diminish a brand and cause the exodus of important employees and customers. Mergers can also bring about unexpected problems. Who will pay the legal bills for old problems not discovered during due diligence? As with some marriages, banks have seen their fair share of horror stories.

Many of these were related to regulator arranged mergers at the height, and rapid pace, of the financial crisis. Think back on JPMorgan and WAMU, the BofA acquisition of Countrywide, and Wells Fargo's acquisition of Wachovia, and follow the money to the large fines and settlements that ensued as a result of prior issues with those acquired companies. Once again, all over the media this morning is the possible settlement between Bank and America and the Department of Justice. (As I write this, I don't know if there is an actual settlement to shake hands over, or that they're only very close.) $17 billion is a lot of doubloons.

We also have news of a HUD suit with Allied Mortgage, although as best one can tell none of the Allied executives who were involved in the massive mortgage fraud and cover-ups have been criminally indicted by the Federal Government: they have been civilly charged not criminally. The story about HUD, FHA, the DOJ, Allied, and (now) Allquest Mortgage is the stuff of novels, per insiders.

Companies everywhere are faced with the QM versus non-QM decision. Non-QM loans are not subprime loans, and although I believe that the QM box is small and excludes plenty of borrowers, the CFPB has gone on record as saying non-QM loans are not bad loans, just that they don't fit the QM box. And as we know, the growth, of non-QM lending has grown, much of it funneled into bank balance sheets.

Many companies are offering expanded programs. Angel Oak, for example, is offering a jumbo program for borrowers one day out of foreclosure, where short sales or bankruptcies are okay, mortgage lates are okay, and some programs will offer loans to borrowers with FICO scores as low as 500.

This week Northern California's RPM Mortgage rolled out new products for "Non-Qualified Mortgage Borrowers." (Note to marketing staff: make sure that this is not read as "mortgages for non-qualified borrowers.") The RPM Tailored Line of Loan Solutions bills itself as "Innovative Loan Solutions for Self-Employed and Retired Borrowers Limited by New Regulatory Guidelines." "RPM's Tailored Line provides innovative solutions for the self-employed or the recently retired who have considerable equity, assets and credit but may be challenged by income verification requirements, which have limited their borrowing options in the past. In addition, these solutions give options to borrowers with a short credit history, credit scores that are marginally outside of the guidelines, or a loan to value outside of QM's established 43% ratio." It includes, alternative income verification for the self-employed, requiring only one year of tax returns, 50% LTV for up to $4 million in borrowing for those with substantial assets, considerable equity and excellent credit, and 65-80% funding on loans from $250,000-$4 million for borrowers with a robust investment portfolio."

Plaza Home Mortgage and CastleLine announced news addressing the perceived repurchase risk that every lender lives in fear of. "In order to help mitigate the financial risk and operational burden caused by repurchase demands, the Plaza Home Mortgage Correspondent Lending Division has launched CastleLine's Certified Loan Program. Using CastleLine's program, Plaza Home Mortgage will protect its correspondent lenders at no additional cost to them, thus substantially mitigating correspondent repurchase risk. The program protects Plaza Home Mortgage, its correspondent partners and investors from loan manufacturing defects such as underwriting errors, fraud and misrepresentations, including defects from compliance, miscalculation of income, occupancy, undisclosed debts and appraisal issues." (Contact Justin Vedder for information on CastleLine's product.)

And for some other relatively recent lender updates...

Flagstar Wholesale Lending has a new Conforming One-Close Construction Program effective as of July 8th.

First Community Mortgage Wholesale is raising the minimum credit score requirement for RD loans to 640: fcmkc bulletin 2014-07a.

Wells Fargo Funding restructured and simplified Non-Conforming pricing to reflect purchase pricing effective August 1st.

U.S. Bank Home Mortgage now requires lenders to provide the Index Rate Percentage by writing it in the upper right hand corner of either the Closed Mortgage Loan Transmittal or the Closed Loan Stacking Order effective August 1st. additionally; effective July 28th, Final Verbal VOE for non-self-employed borrowers will be required.

Weslend Financial Wholesale has expanded its USDA product guidelines; enhancements include 600 minimum FICO and transferred appraisals allowed.

AMX Loans is preparing for Fannie Mae's waiting period requirements regarding borrowers who have had a previous deed-in-lieu of foreclosure or pre-foreclosure sale for applications taken on or after August 16th. AMX Waiting Period changes for DU

M&T Bank is following Freddie's lead on the Freddie Mac Open Access program the amount of proceeds permitted to use to pay closing costs and prepaids to a maximum of $5000.  Additionally, VA Appraisal fees are changing as of August 1st per VA revised information letter 26-14-01.

US Bank posted large deposit requirements effective immediately for conventional agency loans Requirements.

Nationstar Correspondent Lending posted Seller Guide Update. It also published its Correspondent Portal Availability.

The U.S. mortgage-bond industry, through the Structured Finance Industry Group, is taking steps toward creating standards meant to help kick-start sales as the government seeks to wean the housing market from its support. It released the first in a series of papers mapping out its effort to create recommended contract language for new securities. About 200 individuals from 50 companies are working on the project, called RMBS 3.0.

Looking at rates, volatility has hit the US asset-backed securities market this week. Investors are looking at car, country club, mortgage, commercial, lease, etc. deals, and monitoring their price & yield spread compared to Treasury securities. (Obviously the higher the perceived risk, the larger the yield spread.) There was very little in the way of scheduled economic news yesterday in the United States, and it has been relatively quiet in Israel and the Ukraine. We've had the only news slated for today: Initial Jobless Claims came in at 289k, down 14k. The 10-yr. T-Note is pretty much unchanged from Wednesday's close (2.47%) and agency MBS prices are also roughly unchanged.


The Southeast's CBC National Bank is expanding and is searching for 30 new Reverse Mortgage Consultants throughout the country to join its experienced, "best of class team" of 15 in its retail group. And CBC is also searching for wholesale and mini-correspondent AEs in Texas, Virginia, New England, Tennessee, and the Midwest. "CBC is a profitable and well-capitalized FNMA direct lender with seasoned mortgage banking leadership offering FNMA, FHA, VA, jumbo and portfolio products to the tune of $200 million per month." Contact Daniel Diaddigo for confidential inquires or to submit resumes.  

And Procura Mortgage Company has entered the Arizona and Washington markets and is looking for top mortgage professionals and sales managers to join its team. The company strives to exceed expectations of borrowers by always following our core values of service and convenience.  With more than 200 years of combined experience in mortgage lending operations, Procura Mortgage Company's leadership team actively supports its productive, client-focused sales team. If you are a highly productive mortgage professional who shares a commitment to providing exceptional client service, contact Arizona Regional Vice President Sandy Krestan,  or Washington Regional Vice President Martin Sanelli.

While we're on personnel, congrats to Bill Robinson, brought on by ResMac Inc. as a Senior Vice President - National Director of Retail Sales! (ResMac is a producer of Retail and Wholesale production based out of Boca Raton, Florida.) And National MI has hired and appointed Norm Fitzgerald as SVP of its Field Sales team. He's worked in the mortgage industry for several decades, including Nationstar, PHH, and Citimortgage.