The value of
US pensions has soared this year. Per JPMorgan Chase, pensions now cover 96% of future obligations! Pension values
have seen the biggest improvement in 25 years - funding levels were in the high
70%s as of the end of last year. The news could get even better in 2014
if bond yields rise.
This is good since Baby Boomers (1946-1964) are now retiring at the rate of
8,000 per day and this is expected to increase as more enter their retirement
years. (Of course, no one ever truly retires from our business, right?).
"We remain optimistic
that home sales, new home construction and home prices will all continue to
improve in the coming year, even though conditions will be more challenging on
a number of fronts," so
says Wells Fargo's Economics Group in a recent
I hope they're correct. According to the publication sales and construction are
still being held back by the aftershocks of the housing bust, which have
reduced buyer power and led to more restrictive lending criteria. Land
development also faces greater constraints and less public support than it has
in the past. Demographics are also changing in a way that is boosting demand
for rental units and active adult housing but is also restricting demand for
first-time home buyers, trade-up purchases and second homes. Wells' conclusion:
in this environment, housing starts will
continue to struggle to regain their long-term average of around 1.5 million
units a year.
For anyone involved
in a California short sale there is
some good news. On December 5th the California Board of Equalization
(BOE) announced that despite a failure to pass extensions of either the federal
or state mortgage debt forgiveness law, the BOE will conform to IRS regulation,
and income from a short sale (on non-recourse loans) will not be treated as
taxable. In a September letter
submitted by George Runner of the BOE to the Franchise Tax Board's Chief
Counsel Jozel Brunett, in which Mr. Runner requested a legal opinion as to the
potential tax consequences for a California resident who completes a short sale
under existing California law, Mr. Brunett replied, "Since California conforms to the relevant
portions of the federal tax law governing the forgiveness of non-recourse and
recourse indebtedness, California would follow the federal treatment for the
CCP section 580e transactions." A legislative effort to extend tax
protection for California short sales derailed this year. However, the
Franchise Tax Board's announcement that it will conform with the IRS ensures
continued protection for taxpayers without the need for legislation.
In October Massachusetts
recently amended 209 CMR 18, "Conduct of the Business of Debt Collectors
and Loan Servicers", in order to further clarify and establish standards
of conduct for debt collectors and third party loan servicers. The biggest
impact to 209 CMR 18 is the addition of Section 18.21A "Mortgage Loan
Servicing Practices". A third party loan servicer may not use unfair or
unconscionable means in the servicing of a mortgage loan and this section outlines
examples of conduct which will result in a violation. Bankers Advisory writes, "Third
party mortgage loan servicers must comply with additional requirements
regarding the right of a borrower to cure default, loss mitigation options and
evaluation requirements, and loan modification requirements prior to
foreclosure among other foreclosure related servicing requirements." Section
18.21A also outlines the requirements where a third party servicers is acting
on behalf of the mortgagee in providing foreclosure affidavits or sworn
statements and certifications. The complete and official amendments, which went
into effect on October 11th, can be found here.
Iowa recently amended, and
made revisions to, specific code provisions relating to public funds, state banks,
debt management services, the Uniform Money Services Act, currency exchanges,
delayed deposits, mortgage licensing, professional engineers and land
surveyors, real estate brokers and salespersons, appraisers, and architects.
The changes focus on licensing requirements, education and examination of
various license applicants, and the powers of the Board of Appraisers. Bankers
Advisory Inc has a complete section-by-section here.
have 17 business days left until QM is
official. Information continues to flow into the marketplace, although by
now most companies are nearly compliant. The
American Mortgage Law Group & Allregs have compiled an additional bulletin
and FAQ documentation on the upcoming myriad of regulation changes.
If you have additional questions, please email firstname.lastname@example.org
and your email will be answered directly by the speakers. The recording of the
most recent webinar is available here. Access supporting documentation for this webinar here.
the end of September we'd only had 22 banks fail; the 24th was shut
down on Friday. Texas Community Bank, National Association, The Woodlands,
Texas, was closed, and Spirit of Texas Bank, SSB, College Station, Texas,
assumed all of the deposits. This year, per the FDIC, the first 21 bank
failures cost the Deposit Insurance Fund (DIF) $512 million. The 22nd bank
failure (The National Bank of El Paso) cost the DIF $637.5 million or more than
the collective failures of all previous 21 takeovers in 2013.
there is plenty going on inside of banks, and with mergers and acquisitions.
Hovde research finds that since 2000, bank sellers over $1 billion in assets
have captured a 32% premium over those with assets less than that. Meanwhile,
selling banks in metropolitan MSAs over the same time period have captured a
19% premium over banks in rural areas.
recent bank M&A news, Mascoma Savings Bank ($1.1B, NH) will acquire
Connecticut River Bank ($285mm, VT) for $26.7mm in cash. Community Bank ($7.3B,
NY) will acquire the professional-services practice from Lifetime Healthcare
for an undisclosed sum. The practice provides medical-benefit valuation and
consultation services to 150 companies. Spanish Bank Banco de Sabadell SA will
acquire JGB Bank ($530mm, FL) from Columbian billionaire Jaime Gilinski Bacal
for about $56mm or roughly 1.12x book. Volunteer Corporate Credit Union ($1.0B,
TN) will acquire Kentucky Corporate Federal CU ($153mm, KY). First State Bank
($348mm, NE) will acquire Community Bank ($51mm, NE) in an all-equity deal that
would combine both banks. The banks are owned almost entirely by the Randecker
family. Apollo Bank ($257mm, FL) will acquire First Bank of Miami ($198mm, FL)
for an undisclosed sum. Bank of the Ozarks ($4.7B, AR) will acquire Omnibank
($301mm, TX) for $23mm in cash or about 0.75x book.
announced it will sell its asset management subsidiary, RidgeWorth Capital
Management, to RidgeWorth employees and an investor group for up to $245mm.
RidgeWorth provides support to boutique money managers in areas that include
trading, compliance, technology, accounting, distribution and marketing.
Mercantile Bank, a wholly-owned subsidiary of Pacific Mercantile Bancorp, is
exiting the consumer mortgage origination business. The bank, with
seven locations in Orange, San Diego, Los Angeles and San Bernardino counties,
expects to sell or end its mortgage banking division to focus on its mission to
become a prominent business banking franchise, Steven Buster, president and
chief executive of Pacific Mercantile Bancorp said in a statement. "We made the
strategic decision to exit the consumer mortgage origination business due to
the operating performance of the unit and the bank's desire to focus on
continuing to develop the commercial banking opportunity in its marketplace,"
Buster said. Pacific's consumer mortgage division will stop accepting new
applications on or about Dec. 20.
change is constant: TCF National Bank ($18.4B, SD) will close 37 bank
branches in Jewel-Osco stores in Chicago to address customer migration away
from traditional retail banking to mobile, ATMs and online. TCF also announced
it would be adding 52 ATMs to Chicago Transit Authority train stations around
part of its QM and ATR preparation, Wells is revising the qualifying
rate requirements for 7/1 and 10/1 ARMs to be calculated as the greater of the
fully indexed rate or the initial note rate, effective as of January 10th.
Chase is expanding the
Chase Legal review of inter vivos revocable trusts, which should be submitted
to Chase Customer Support; however, the credit file should still go to
underwriting. This is available only for Agency and non-Agency non-delegated
order to align with Agency guidelines, Chase has expanded the maximum LTV/CLTVs
for Agency ARMs with Accept/Eligible findings in LP, FNMA Fixed Rate 2-Unit
Primary Purchase transactions, and FHLMC Fixed Rate 1-Unit/Condo/PUD Non-Owner
Occupied Purchase transactions. The Agencies' new LLPAs for cash-out LP
Conforming ARMs with expanded LTVs will apply as well. Applicable loans with an
LTV between 75% and 80% will incur an adjustor of -1.250 for FICO scores
between 700 and 739 and -.500 for scores of 740 and over.
to the markets, we finished Friday with the market thinking that yes, we can
all expect the Fed to taper off buying fixed-income securities, but still we
don't know when, but even when it does scale things back, the world will not
end and rates won't go up 2%. In a Reuters' poll of 63 economists conducted after
Friday's employment report, 14 percent of those polled expected tapering to be
announced in December, 30 percent in January and 52 percent in March. This
compared to odds of 5 percent for December, 26 percent for January and 69
percent for March in a poll conducted a couple of weeks prior to that. Supply
from mortgage bankers has been averaging $1 billion per day while the daily
pace of Fed buying has been $2.7 billion.
more importance to individual borrowers was the FHFA announcement late Monday
regarding changes in guarantee fees, including a 10 basis points increase in
the base g-fee for all mortgages effective April 1, 2014 for loans exchanged
for MBS and March 1 for loans sold for cash. We also had the Senate vote
confirming Rep. Mel Watt as FHFA Director. Investors are worried that Watt will
expand HARP in various ways including extending the cut-off eligibility date
and offering principal forgiveness.
have a lot going on this week. Today is the Industrial Production & Capacity Utilization duo. Tomorrow is
the Consumer Price Index. Wednesday,
December 18th, Federal Open Market Committee (FOMC) will
announce its views on the economy along with information regarding QE3 and
potential changes in policy rates or asset purchases. Prior to that we'll have
the Housing Starts & Building Permits duo, followed by Thursday's Existing Home Sales, Philly Fed,
and weekly Jobless Claims numbers. Friday, December 20th, Gross
Domestic Product (GDP) will measure the total output of the country's
production. We'll also have the Treasury auctioning off $112 billion in 2-, 5-
and 7-year notes and 5-year TIPS beginning Tuesday through Thursday. Looking at
actual numbers, the risk-free 10-yr note
closed Friday with a yield of 2.87% and is now down at 2.85%; MBS prices are a