Besides the adults taking over Halloween, and the underwriting department duking it out with accounting to see who takes home this year's department costume prize, much of the United States will change their clocks Sunday morning (the end of daylight saving time). They then, 133 days later on March 13 of 2016, will change them back. If you think it's a hassle to change the clocks for a little over 1/3 of the year, like Hawaii, most of Arizona, Midway Atoll, Wake Island, and a small region of Alaska who say "leave us out of this", there's a movement afoot to not change the clocks at all. And to make things even odder, not all countries change, and many of those that do did so last weekend!

There is a lot going on with California lenders out there!  First of all, the march of non-bank lenders continues. Headquartered in San Francisco, SoFi seems to be threatening Bank of America per Forbes.

Also headquartered in San Francisco, Parkside Lending announced that its insurance subsidiary PSL Insurance Company, LLC has been approved to become a member of the Federal Home Loan Bank (FHLB) of Cincinnati, effective Oct. 5, 2015. "Through its FHLB membership, Parkside Lending will provide leverage to its affiliate, Parkside Mortgage Trust, a Real Estate Investment Trust (REIT). Both institutions are looking forward to a mutually beneficial relationship with the FHLB. With this membership, Parkside Lending has access to a stable financing source to enhance Parkside's short-term and long-term value propositions."

Keeping with SF, two San Francisco Bay Area companies, Sindeo and NextHome, Inc. announced their strategic agreement aimed at reaching first time homebuyers and collaborating to support the companies' rapid national growth. "NextHome, Inc. offers two distinct franchise brands, Realty World Northern CA & NV with over 170 offices and more than 900 agents in northern California and northern Nevada, as well as the newly launched NextHome franchise which began opening offices in January of 2015 growing to over 50 offices across 20 states in ten months. Sindeo, launched in January 2015, currently operates in six states and has plans for rapid growth that includes processing loans in 30 states by the end of the year. This trend continues in 2016, with both companies expected to be doing business in all 50 states by year-end."

Just north of SF, in Petaluma, First California Mortgage Company announced an Affinity Mortgage program to increase its product offerings and market share in line with its continued national expansion. "First Cal, working with Samuel EM Clemens LLC, becomes one of the first home mortgage providers to offer affinity groups a new level of benefits and incentives for their members, including a new revenue stream for the affinity organization, with no risk or investment, access to a team of professionals to help design and implement the program, and turnkey marketing solutions to support the offering. First Cal's program helps facilitate the dream of home-ownership by providing preferred mortgage rates and fees with exceptional features and great products, personalized service from a licensed mortgage professional, and a quick, convenient, and easy application process. (Information on the program is available at http://www.firstcal.net/Affinity.php)

No one wants to come in to work and find out their company is rumored to be up for sale. So be patient if the folks at United Guaranty are a little testy today since that is exactly what is happening to them. AIG is supposedly down the path of spinning UG off due to various issues including the regulatory hassles of owning a mortgage insurance company.

Let's see what has been happening to pending home sales (homes sales in which a contract is signed but the sale has not yet closed) over several months, and we may see that the housing engine is starting to make some funny noises...

Yesterday we learned that Pending Home Sales were -2.3% in September, dropping for the second straight month and to their second lowest index reading in 2015, according to the National Association of Realtors®. All four major regions experienced a pullback in activity in September.  The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 2.3 percent to 106.8 in September from a slightly downwardly revised 109.3 in August but is still 3.0 percent above September 2014 (103.7). With last month's decline, the index is now at its second lowest level of the year (103.7 in January), but has still increased year-over-year for 13 straight months. NAR's chief economist Lawrence Yun says a combination of factors likely led to September's dip in contract signings. "There continues to be a dearth of available listings in the lower end of the market for first-time buyers, and Realtors in many areas are reporting stronger competition than what's normal this time of year because of stubbornly-low inventory conditions," he said. "Additionally, the rockiness in the financial markets at the end of the summer and signs of a slowing U.S. economy may be causing some prospective buyers to take a wait-and-see approach."

But as recently as May Pending Home Sales were +0.9%, its highest level in over nine years!   At that point it was the fifth straight month, increasing the likelihood that home sales are off to their best year since the downturn.

All the lenders out there are thumping their chests, albeit nervously, as their TRID loans fund. But lost in the shuffle are the flood insurance changes. Beware! There were clarifications to the Final Flood Insurance Rule Amendments, which went into effect Oct. 1the result of efforts from five federal regulatory agencies. Other amendments to the flood insurance rules come into play with the start of 2016. Those who "cut to the chase" say that the federal financial regulatory agencies jointly amended their flood insurance regulations in order to incorporate changes effected by the Homeowner Flood Insurance Affordability Act of 2014. Financial institutions will be required to escrow for flood insurance premiums and other fees for residential improved properties, but new exemptions are created for certain detached structures from the mandatory flood insurance requirement. There are also clarifications dealing with the force placement of flood insurance premiums.

Financial institutions with assets of $1 billion or more will have to begin escrowing for flood insurance premiums and other fees for any designated loan secured by residential improved property or a mobile home that is originated, refinanced, increased, extended, or renewed on or after January 1, 2016. Financial institutions with assets of less than $1 billion are not required to escrow for flood insurance premiums and fees unless they have a policy of uniformly and consistently escrowing for taxes and insurance or if they were otherwise required by Federal or State law to escrow for taxes and insurance as of July 6, 2012 (the enactment date of the Biggert-Waters Act) for the term of the loan.

Flood insurance premiums and fees are not required to be escrowed for loans that are in a subordinate position to a senior lien secured by the same property for which flood insurance is being provided. Nor are they required for loans secured by residential improved real estate or a mobile home that is part of a condominium, cooperative, or other project development, provide certain conditions are met, loans that are secured by residential improved real estate or a mobile home that is used as collateral for a business purpose, home equity lines of credit, nonperforming loans, or loans with terms of 12 months or less.

Financial institutions, or the servicers acting on their behalf, will have to provide a revised Notice of Special Flood Hazards that includes new language that advises the borrower about the requirement to escrow for the flood insurance premiums and fees. The new language also explains that the escrow requirement could be triggered at any time during the life of the loan if the lender or servicer subsequently determines that a previous exception to the escrow requirement no longer applies. In addition, covered financial institutions must give borrowers with existing designated loans as of January 1, 2016 the option to escrow for their flood insurance premiums and fees unless the lender or the loan is otherwise exempt from the escrow requirement. This notice must be provided by June 30, 2016 and financial institutions must comply with the borrower's request to escrow within a reasonable period of time. A model clause for the notice is provided in Appendix B. There are specific rules that apply in situations where an institution that previously qualified for the small lender exemption no longer qualifies.

Financial institutions will no longer have to require flood insurance for detached structures on residential properties if the property is not connected to the primary residence and it is not being used as a residence. In addition there are plenty of rules covering force-placed flood insurance. For these and the full details one should go through the link above!

Turning to the bond markets, rates went down for a while, now they're creeping back up - in spite of Pending Home Sales declining and a tepid GDP growth number for the third quarter that was viewed as weak. We did, however, have a solid $29 billion 7-year note auction at 1.88%. How'd you like to tie up your hard-earned $1 million for seven years and earn $18,800 a year? At least there's no state tax.

We're wrapping up the week with September Personal Income and Personal Spending (08:30 EDT), September PCE Prices - Core (08:30 EDT), and Q3 Employment Cost Index (08:30 EDT); later is the October Chicago PMI and the final October Michigan Sentiment number. We closed the 10-year at a yield of 2.17% and in the early going we're at 2.15% and MBS prices are slightly better than Thursday's close.

Jobs and Announcements

"AnnieMac Wholesale is looking to grow again and is seeking Divisional VPs and their teams to join its dynamic organization. AnnieMac is a leading, national privately held firm that is a FNMA, FHLMC, GNMA approved seller/servicer. AnnieMac is significantly expanding its footprint from the East Coast into the Midwest and West so we are looking for top‐notch teams to join us and be part of the story. We are consistently awarded as one of the Best Places to work and invite you to join one of the best cultures in the industry. We offer great compensation, a full complement of benefits, top tier pricing, a dedicated Wholesale Operations team, and the ability for your team to experience unlimited growth! Please send your resume to Ryan Kube, EVP of Production."

A growing East Coast lender, licensed in 23 states, is seeking an experienced call center manager to head up a new residential mortgage retail direct platform. Candidates should have experience with direct to consumer sales and proven ability to manage an origination sales team." Confidential resumes should be sent to me at rchrisman@robchrisman. com

In retail news Colorado's Peoples National Bank continues to look for experienced LOs and branches in the Rocky Mountain region. Peoples offers a solid privately-held national bank platform, an aggressive mortgage sales operation that has been in the business more than 30 years, and did more than $1 billion in residential production in the past two years. Interested parties should contact Vice President Jim Irisawa (303.721.1120).

In other personnel news First Guaranty Mortgage Corporation has named Kathleen Alvarez as its TPO National Underwriting Director. Congrats!