What does Florida have that the rest of us don't? The highest percentage of cash buyers according to Zillow's latest research. There are plenty of reasons for this, but as of the second quarter of 2015 with 51 metros analyzed, cash purchases of homes were far more common in Midwestern and Southeastern markets, particularly in Florida, than in the Western U.S. The five markets with the highest percentage of all-cash home purchases were all in Florida. Metros with small shares of cash buyers tend to have younger populations, while markets with higher shares of cash buyers tend to have a larger proportion of households headed by a widow/widower. (Interestingly, among the 10 markets nationwide with the lowest share of cash buyers, only one is not in the west - Worcester, Massachusetts, with 21 percent of home purchases made with cash. Colorado Springs has the lowest share of cash buyers among large metros analyzed, at 14 percent.)

Must be something in the water causing this rash of settlements: JPMorgan Chase has settled its legal scores in the Lehman Brothers case ($1.42 billion), with the State of Ohio ($150 million), and now bond insurer Ambac Financial Group Inc. ($995 million).

No one doubts that banking and mortgage banking will see continued mergers and acquisitions this year. STRATMOR's Jim Cameron and Jeff Babcock attended the MBA's M&A workshop last week, and Jeff wrote, "If attendance at the last week's very successful M&A Workshop conducted by the Mortgage Bankers Association is a reliable leading indicator, the industry should experience a more robust level of deal activity than any recent period. Participants were an interesting blend of motivated buyers, M&A advisors, attorneys, and a few vendors. (If there were any prospective sellers, they would have been reluctant to raise their hand to disclose their intentions.) The Workshop panelists provided experiential information and insights for both buyers and sellers, supplemented by legal/regulatory considerations and post-closing dynamics and recommendations.

"From the vantage point of an active player in the M&A space STRATMOR had several key takeaways. In the current seller's market environment, there is significantly greater investor demand than there are attractive, well managed retail platforms available for sale. Compared with organic recruiting, today's buyers believe that an acquisition growth strategy is more efficient, less risky and maybe even more cost effective. Perception that you can buy better talent than you can hire which favors the buy vs. build option. Left largely unaddressed was what factors might motivate sellers to explore their options (note that STRATMOR, in currently representing a handful of sellers, has learned some helpful lessons).

"Experienced sellers encouraged their peers to conduct more extensive operational due diligence on their prospective buyers before closing the deal. While it's a cliché to emphasize the critical nature of cultural compatibility, both sides clearly benefit from digging deeper into the implications of cultural practices ... maybe even retaining an advisor to provide an independent assessment. Too little attention is typically paid to planning the integration/assimilation, causing unnecessary pain and suffering during that initial transition period ... much of which could have mitigated by better project management. An experienced acquirer brings many tangible benefits and valuable lessons to the seller organization. Originator compensation compliance has been elevated to a key consideration in M&A negotiations. And at the end of the process, it's personal chemistry and 'attitude' that can make the difference between success and failure." Thanks Jeff!

And that is just mortgage bankers. What about bank M&A? Steve Brown with PCBB writes, "We had fewer bank and thrift (bank) deals in 2015 than in 2014 and the percentage of bank deals vs. the universe of the industry was right in line with longer term averages. (During the last 10 years) you find that for any given year the percentage of banks at the end of the year is roughly about 4% less than the percentage that started the year, or about 1% per quarter.

"In 2015, the number of bank and thrift deals was 281 according to SNL Financial. This compares to 287 (in 2014), 227 (2013), 222 (2012) and 152 (2011). According to FDIC data, the number of banks and thrifts that existed at the end of 2010 was 7,659 vs. about 6,228 that were around at the end of 2015. That means about 1,430 banks went away or about 286 per year....what this basically tells us is that for 2016 (at least historically speaking), somewhere around 2% to 4% of banks and thrifts will merge away just as they have each year prior based on the pure math of it all. That means we start 2016 with about 6,228 and it will end up around 6,100 to 5,980 or so (125 to 249 deals). To be clear, we absolutely believe the industry will continue to consolidate, just not at the same pace as some might have you believe and based on the historical data."

Just in the last week or so we learned that in Illinois Royal Savings Bank ($205mm) will acquire Park Federal Savings Bank ($146mm) for about $240,000 in cash. Wintrust Financial ($22B, IL), a 15 bank holding company, will acquire Foundations Bank ($125mm, WI) for about $30mm in cash. mBank ($746mm, MI) will acquire The First National Bank of Eagle River ($141mm, WI) for about $12.5mm in cash. And Pinnacle Bank ($8.5B, TN) will acquire an additional 19% of Bankers Healthcare Group for about $114mm, bringing its total ownership percentage to 49%.

On the topic of risk sharing Scott Olson wrote, "On behalf of CHLA I wanted to respond to your column about GSE up-front risk sharing, since CHLA has a different take than the MBA does on this. CHLA is very concerned about the use of up-front risk sharing and its potential negative impact on independent mortgage bankers. CHLA is particularly concerned if upfront risk sharing is done by large vertically integrated bank/securities firms, as was the case in some large J P Morgan risk sharing deals that have been done  This approach creates the opportunity for the big banks to monopolize GSE lending if upfront risk sharing securities deals are the dominant form of risk sharing.  

"Up-front risk sharing also raises the risk of a return to significant volume discounts, if the process is done upfront and there are no protections against this. The process described in your article describes how lenders could cut deals with the PMIs - and obviously the big banks with large volume are in the position to cut the best deals. Finally, it is not clear why doing the risk sharing upfront really reduces GSE risk compared to back end risk sharing. Above all, we need more transparency about the development of risk sharing and there needs to be more focus on the impact of up-front risk sharing the ability of small and mid-size mortgage lenders to access the secondary market through the GSEs.

"FYI, here is a link to a Housing Wire CHLA Op-Ed from November on GSE issues - just below that is excerpted paragraphs about our concerns about up-front risk sharing. 'CHLA supports risk sharing - but is concerned about up-front risk sharing through securitizations by a few big vertically integrated bank/securities firms. These mega-banks could leverage risk-sharing securitization to generate funds to exclusively originate GSE loans through an affiliated bank. There are already two such deals totaling $2 billion with JPMorgan Chase. If this becomes the dominant form of risk sharing, small and mid-size firms could be shut out of the process. FHFA and the GSEs should be fully transparent about these risk sharing deals - and should ensure that small and mid-size lenders aren't shut out - by banning practices such as volume discounts and stopping mega-banks from dominating both risk sharing securitization and underwriting of the loans they fund.'"

There wasn't a lot to talk about in the bond markets yesterday, so I won't waste your time: there were no major economic data releases, Treasury auctions, or Fed speakers (we are in the blackout period ahead of this week's FOMC meeting). We do have some news out today, however: the November Case-Shiller 20-City Index, the November FHFA Housing Price Index, and January's Consumer Confidence. We also have a $26 billion 2-year Treasury auction. The risk-free 10-year T-Note ended Monday yielding 2.02% and in the early going today it's sitting around 2.01% and agency MBS prices are a shade better.

Jobs and Announcements

"A dynamic, growing mortgage banker is searching for a seasoned sales coach with a proven track record to help it reach the next level of production with a focus on customer service and compliance. The 30+ year old retail lender is looking for a forward thinking, creative achiever to lead its proprietary sales coaching platform, featuring a system for accountability. (This position will be housed in the West/Southwest region.) The lender, with wide-ranging licensing in several states, 'offers  competitive pricing and products, exceptional tools and support, and is owned and led by top producing originators with an intimate knowledge of the keys to reaching the pinnacle of success.'" For confidential consideration please send me your resume at rchrisman@robchrisman. com. (Please specify opportunity and excuse any delays in responding due to travel.)

Jim Loving, Director of National Sales for Planet Home Lending's Correspondent Division, is looking for a Southeast Regional Sales Manager. This position will be responsible for establishing and maintaining relationships with correspondent customers within their respective regions. The candidate should be active in a Correspondent channel and must be located in the Southeast.  Planet Home Lending supports multiple business channels uniquely positioned to provide competitive products and services.  The company is an approved Fannie, Freddie, FHA, VA, and USDA direct lender and $13 Billion mortgage servicer. If interested in joining our employee-friendly, growing organization, please send an updated resume in confidence to Chase Gonzalez.

There are big changes at First Community Mortgage. Michael Hilleary, former director of correspondent lending has been promoted to Chief Operating Officer. At the same time,

Andy Voyles, former SVP of retail, has been promoted to Executive Vice President and Director of Lending. In the COO role Hilleary, based in Louisville, KY, will oversee secondary marketing, information technology, credit administration, accounting, post-closing and servicing.  Voyles will be responsible for all the company's lending channels, including its retail, wholesale and correspondent divisions and is based in Murfreesboro, TN. FCM, is a wholly-owned sub of First Community Bank in TN and is a direct Fannie, Freddie, and Ginnie approved lender serving over 35 states.

Stonegate Mortgage Corporation announced that Timothy Verinder has been named Southwest Regional Manager. In this role, he will lead the Southwest Region's Third Party Origination sales teams, selling products in all three TPO channels - broker, non-delegated and bulk mandatory. He will report directly to Scott Houp.

Quicken Loans, the nation's second largest retail mortgage lender, announced John Fikany has joined the company as Vice President of Strategy. "In the newly created role, Fikany will be responsible for development of strategy and execution for large technology and other initiatives, while identifying and leveraging technology and business opportunities within Quicken Loans and its family of companies."

And the Stearns Correspondent Lending Division is expanding and recently hired two key Regional Managers: Gabe Medrano and Nicole Avey have joined the Stearns team supporting the East and West Sales Divisions respectively. Congrats on the new assignments!

There's a webinar this Thursday, January 28 at 2:00 PM EST on Easy Steps to Becoming a Mortgage Broker from National Mortgage Professional and presented by a huge proponent of wholesale and the Mortgage Broker, Mat Ishbia (President and CEO of United Wholesale Mortgage). He'll share tips to opening a broker shop, the advantages that brokers have over bankers and how to recruit top talent. Don't miss this webinar that will show you why today's brokers have the upper hand. If you're an MLO or Branch Manager and want to become a Mortgage Broker, or are you already a Mortgage Broker and want to make sure you did it right, register here.

And Hammerhouse, LLC has launched its 6th Annual Survey for Mortgage Leaders and Producers. The 32-question survey focuses on the "Six Core Components"- Business, Leadership, Culture, Operations, Technology, and Geography. "With our 6^th survey, we will continue to analyze year over year trends relative to the concerns, needs and wants of the life blood of this industry: YOU, the Leaders and Producers. The results will be posted on March 31^st. Participation is free, takes about 3 minutes, and respondents will be entered in the raffle for a free iPad.