How much do small firms spend on examiners and auditors camping out in their shops? And what about legal bills? I am sure it is a tiny fraction of what companies like Bank of America, Citi, and Chase are spending. And this week Reuters did a piece on the continuing probes that Wells Fargo is handling - what a nightmare.

What trends are we seeing in rents and multi-family news that will eventually help lenders? After all, the higher rents go, the mo' better buying looks - all they need are some decent down payment assistance or high LTV programs. Reis Inc. reports average effective apartment rents climbed 4.6% nationwide in 2015, the "best" performance since 2007. In fact apartment rents have risen more than 20% since early 2010. And to the surprise of no one, research by Equifax and Moody's finds the percentage of people age 18 to 34 years old that are living with their parents is around 23% currently versus the roughly 18% level seen from 1990 to 2005.

As far back as December we learned that US banking regulators were stepping up their scrutiny of commercial real estate lending practices.

Recently the Fed released its senior loan officer survey. The January survey results indicated that banks tightened their standards on commercial and industrial (C&I) and commercial real estate (CRE) loans in the fourth quarter of 2015. The survey results indicated that demand for C&I loans had weakened somewhat and demand for CRE loans strengthened somewhat during the fourth quarter on net. Banks indicated that they expected standards on C&I and CRE loans to tighten over 2016 and loan performance of C&I loans and loans secured by multifamily residential properties (MF loans) to deteriorate over that same period. Regarding loans to households, the survey found a moderate easing of standards on some categories of residential mortgage loans as well as on auto loans, while banks reported having left standards on credit card loans basically unchanged.

In an interesting twist, the omnibus spending package Congress recently passed included measures easing restrictions on foreign real estate investment that some expect will increase foreign investment in commercial real estate by billions of dollars.

The MBA has released numerous reports regarding the commercial/multifamily real estate finance markets. The MBA's Q4 Commercial/Multifamily Mortgage Bankers Originations Index report highlights that commercial and multifamily originations were up 19 percent in the fourth quarter of last year and 24 percent YoY. The fourth quarter also marked the fourth greatest volume for borrowing and lending thus far. Another MBA report suggests that eleven percent of outstanding commercial and multifamily mortgages held by non-bank lenders/investors will mature this year, which would be a 51 percent increase from 2015. Maturities are also expected to grow to $208 billion in 2017. The MBA forecasts a 3 percent rise in commercial/multifamily mortgage banker's originations in 2016 and current mortgage debt outstanding should increase to $2.9 trillion.

Zelman and Associates published its Banking Survey from the fourth quarter of 2015.Lenders ranked availability of AD&C capital at 68.2 this quarter, slightly down from 70 the previous quarter. AD&C loan balances for the banking industry was up 18 percent YoY, with 2015 anticipated as being the year with the strongest growth since 2006. Within the last 30 years, AD&C loans have averaged 5.7 percent of total outstanding bank loans, with peaks reaching in 1986 at 8.5 percent and 2007 at 8.8 percent. Survey respondents believed capital availability was the strongest among local lenders at 78.7 and banks of all sizes have been participating in the recovery. At the end of the fourth quarter last year, the availability of single-family AD&C financing was rated 76.4 and the availability of multi-family AD&C was rated at 67.2. For more information regarding the survey, contact Ivy at ivy@zelmanassociates.com.

Now is the time to sell, according to a recent Apartment Survey published by Zelman. The majority of respondents (61 percent) said that buyer demand is strong and pricing is high, making it a prime seller's market. December blended rent growth reached 3.7 percent, with the strongest rent growth evident on the West Coast at 4.9 percent, but at the same time, the deceleration has been most severe on the West Coast as well as rent growth declined 90 basis points from last year. New move in growth for Decembers slightly declined to 3.3 percent along with occupancy at 94.2 percent. Implied move-outs resulting from purchasing a home declined to 14.6 percent. Pricing power was noticeable in 22 of the 30 metros that are tracked and multi-family transaction volume should increase 12 percent in 2016.

Wells Fargo Funding is updating its multi-family 2- to 4-unit and condominium adjusters for Fannie Mae HomeReady and Wells Fargo Funding Home Opportunities loans to better align with Fannie Mae's adjuster caps. The Best Effort and Mandatory rate sheets will reflect multi-family 2- to 4-unit and condominium adjusters by LTV and FICO for HomeReady and Home Opportunities Loans effective February 29th. These changes will also mitigate issues Sellers were experiencing when registering and/or locking HomeReady Loans, which were the result of differences between Wells Fargo Funding adjusters and Fannie Mae's adjuster caps.

As if finding a place to live as a college student was not hard enough, new apartment buildings that have popped up in Philadelphia are attracting young adults, due to its close proximity to college campuses like Drexel University and University of Pennsylvania. Yet these apartment complexes are not geared towards the undergraduate students that are nearby, but instead are intended to attract young professionals to live in the University City. The cost to rent these apartments range from anywhere between $1,900 for a small one bedroom apartment to almost $3,000 per month, as the high rent prices are meant to discourage undergraduate residents. Even the developers who have been building these luxury apartments near college campuses say they are intended for faculty members and not students and at the same time, allow young adults to enjoy the "college experience" by way of the apartment location. Not only is the high rent a strategy to prevent undergraduates from renting, but the lease terms purposefully miss the start of the academic year, and they reject applicants who rely on a guarantor to pay rent. The trend for building luxury apartments for young professionals is starting to take hold into other college campuses like Arizona State University, Texas A&M University in College station and the University of Chicago. 

The federal banking agencies issued a statement to reinforce prudent risk-management practices related to commercial real estate (CRE) lending. The agencies have observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards. Financial institutions should maintain underwriting discipline and exercise prudent risk-management practices to identify, measure, monitor, and manage the risks arising from CRE lending. Financial institutions should have risk-management practices and maintain capital commensurate with the level and nature of their CRE concentration risk. The statement reinforces existing guidance for CRE risk management and contains a table that lists interagency regulations and guidance related to CRE lending activities.

And this week Ken Harney wrote a piece for the Washington Post on how lenders are promoting home ownership for renters - catch the wave!

Turning to something simple, like the bond markets, let's face it: as opposed to a few weeks ago, when our markets were being moved by oil and China, this week seems practically moribund. We have seen, however, plenty of intra-day volatility on Tuesday and again yesterday - and that impacts secondary marketing results. The U.S. Treasury complex rallied sharply Wednesday morning after we learned that sales of new homes in the U.S. fell to a 494K annual rate in January from 544K in December, and that Markit's flash PMI for the U.S. service sector fell to 49.8 in February, well short of both expectations and the January reading of 53.2. But then prices bond prices headed back to pretty much end unchanged on the day. Fortunately the $34 billion 5-year Treasury auction was well-received.

Are we decoupling our markets from what happens in China? Wouldn't that be nice? In overnight news, European stocks rose despite the Shanghai Composite index falling the most in a month. Today for scheduled data we've seen Initial Jobless Claims (+10k to 272k, as forecast). We've also had January Durable Goods Orders and Durable Goods Orders ex-transportation (+4.9%, +1.8%, respectively, the strongest in about a year), and coming up is the December FHFA Housing Price Index. Anyone wondering where rate sheets might come out this morning should know that the 10-year yield was 1.74% at the close of Wednesday and this morning is sitting around unchanged with agency MBS prices a shade better.

The Quotes of Steven Wright, part 2 of 3.

13 - How do you tell when you're out of invisible ink?

14 - If everything seems to be going well, you have obviously overlooked something.

15 - Depression is merely anger without enthusiasm.

16 - When everything is coming your way, you're in the wrong lane.

17 - Ambition is a poor excuse for not having enough sense to be lazy.

18 - Hard work pays off in the future; laziness pays off now.

19 - I intend to live forever. So far, so good.

20 - If Barbie is so popular, why do you have to buy her friends?

21 - Eagles may soar, but weasels don't get sucked into jet engines.

22 - What happens if you get scared half to death twice?

23 - My mechanic told me, "I couldn't repair your brakes, so I made your horn louder."

24 - Why do psychics have to ask you for your name?

Jobs and Announcements

Yet companies are finding interesting niches. "TRID delays, servicing retention, expansion, business improvement, and distributions all require capital. Cash available to independent mortgage bankers typically consists of retained earnings, short term loans, or paid in capital. Created and operated by mortgage bankers, Amherst Mortgage Banking Services, LLC provides Independent Mortgage Banks with long-term, non-dilutive capital customized to their needs. If you are an independent mortgage banker closing over $500 million annually, please contact Timothy McAvenia, 415-360-4551.

And in wholesale news LDWholesale is asking AEs if they are looking for a rewarding career opportunity. The company is looking for experienced Account Executives in CA, FL, GA, IL, NC, NV, OR, TX, VA, and WA to join its expanding team. LDWholesale is the Third-Party Origination division of loanDepot, LLC, the nation's second largest nonbank consumer lender. "Today's mortgage brokers play an important role in the housing market. LDWholesale looking for talented, highly professional Account Executives to solicit, build, and maintain strong, long-term partnerships with brokers. Broker partners enjoy LDWholesale's dedicated, high-touch boutique-style service, diverse suite of mortgage products, competitive rates, and proprietary mortgage technology. LDWholesale is a direct seller to FNMA, FHLMC, and GNMA. Join its winning team, visit www.ldwholesale. com/Careers.

"Conventus Lending, an asset-based lending start-up in San Francisco, has a couple wonderful opportunities for very talented individuals to join our team. We are a small team of experienced mortgage professionals looking to create a fast, easy lending platform for property developers, real estate professionals and entrepreneurs. If you are looking for a ground-floor, challenging position in a fast-paced environment, Conventus Lending is looking for you. We are looking for a Senior Loan Processor, a Mortgage Loan Originator and a Mortgage Sales Director." Please contact Chief Investment Officer Tony Sachs (415.780.1154) for more information.

In wholesale news, brokers might be interested to learn that "as a part of its mission to be a true partner for the industry, REMN has launched Flyer Paradise, a free website that allows brokers to quickly and easily create professional looking marketing collateral. Those who register on the Flyer Paradise site will be able to produce digital and printable marketing materials that can be customized with their contact information, logo and more. Developing marketing materials takes time and money that you just don't want to spend. On the job side, REMN continues to grow and is still looking for established account executives around the nation who share the company's dedication to an excellent broker experience." If you know someone that matches that description, have them email their resume to aerecruiting@remnwholesale. com.

Assurance Financial reports it is closing loans on time in spite of TRID. The company is expanding, too. They have an immediate need for branch managers and loan officers throughout the Southeast and Southwest. Assurance Financial supports all of its LOs with ready-to-use marketing materials and customized webpages plus a dedicated back-office team that is focused on consistently closing loans on time. If that sounds good to you, reach out to Paul Peters, CMB at 225-239-7948 or visit www.lendtheway. com/careers.

Congrats to Tom Davis who First Guaranty Mortgage Corporation appointed to be its National TPO Sales Director.

And Dart Appraisal, an independently-owned, nationwide appraisal management company (AMC), announced some personnel additions. Timothy Coleman will be covering south Texas, Gary Hale will cover the north Texas area including Dallas/Fort Worth, and Brian Killian is now a national account executive for Missouri and Kansas.