“Q: How do you transfer funds even faster than electronic banking? A: By getting married!” That’s my attempt to ease into the news that the IRS increased the marriage penalty." The Internal Revenue Service (do you ever think about that name?), through AOD 2016-02, is offering a very large reward for unmarried taxpayers who co-own a home: double the mortgage interest deduction available to married taxpayer.

What do, in alphabetical order, Arch, Essent, Genworth, MGIC, National MI, Radian, and United Guaranty have in common? One guess is that they seem to help sponsor practically every conference or company event that occurs in residential lending. Another is that they are trying to grab, assuming a $1.6 trillion origination market this year, about 10% of that, or $160 billion of residential business. One could optimistically say $200 billion this year, or, let me grab my HP-12C, about $25 billion per private mortgage insurance company, $2 billion a month. Of course the pie isn't evenly distributed: National MI and Arch have less than 10% each versus UG at over 20%.

Will private MI companies be helped by front-end risk sharing with Fannie Mae & Freddie Mac? Will they be helped by merging or being sold - maybe Radian to Essent, or UG to whoever? Stay tuned! Certainly each one is focused on competitive advantages, and discussing the pros and cons of "rate card" versus "black box" pricing policies.

For example, Genworth introduced its improved Rate Express mobile app. Lenders can use Rate Express to find and compare rates, and TEXT them, plus send a quote to themselves or a colleague, and save it with the rest of their loan documentation. As always, lenders should enter their Org ID and save it to their preferences for the most accurate results. The mobile app can be downloaded from the App Store orGoogle Play. Or just search "Genworth Mortgage Insurance" in the app store's search field.

Genworth has a lot going on overseas, and with its long term care division. Those aside, here in the States Genworth's MI biz's operating income came in at $114 million in the 2^nd quarter, a shade above estimates and up a hair from $113 million last quarter. The company had lower incurred losses in the U.S., which is nice. The loss ratios helped, as did the improved performance in the United States. GNW reported operating EPS of $0.25 versus the consensus estimate of $0.21. Net EPS of $0.35 per share included gains from the sale of business and the extinguishment of debt. Diluted TBVPS (ex-AOCI) was $19.54 with an operating ROATE of 2.1%. And Genworth completed two MI reinsurance agreements that each add $150M of PMIERS capital.

National MI earned a small profit during the second quarter of EPS (earnings per share) of $0.03 mostly on higher-than-expected earned premiums. Management increased the 2016 net income guidance to $7-$10 million (up from a "possibly" profitable year), and expects $60 million for 2017. NMI's report contained the terms of the new quota share reinsurance transaction which appear to be attractive with an after-tax cost of capital of 3%. The transaction will become effective in 3Q16, and provides the capacity to scale to $50 billion of insurance in force (IIF).

MGIC announced that it priced the public offering and sale of $425 million in aggregate principal amount of 5.750% senior notes due 2023. The notes will bear interest at a rate of 5.750% per year, payable semi-annually. MGIC intends to use a portion of the net proceeds from this offering, together with, in certain cases, shares of its common stock, to purchase approximately $292 million aggregate principal amount of the Company's $500 million of outstanding 2% Convertible Senior Notes due 2020. The Company also intends to use a portion of the net proceeds to purchase shares of its common stock to offset the shares used as partial consideration in the purchase of the 2020 Convertible Notes.

MGIC's 2^nd quarter earnings also came out a few weeks ago. MGIC Investment's total operating revenue of $262.7 million was up 8.2% year over year on higher premiums earned, investment income and other income. New insurance written was $12.6 billion in the reported quarter, up 6.8% from $11.8 billion in second-quarter 2015. As of Jun 30, 2016, the company's primary insurance in force was $177.5 billion, up 5.2% year on year. It covered approximately one million mortgages.

Essent reported GAAP and operating EPS of $0.57 and $0.56, and management continues to express a positive outlook for post-PMIERs price adjustments on the competitive landscape. In 2Q16, ESNT rounded out a strong first half of the year with new insurance written up 12% year to date versus 1H15, insurance in force up 26% from a year ago and operating ROEs up 300 basis points year over year to 16%. Furthermore, the company maintained its 12% market share for the sixth consecutive quarter despite the choppy competitive market and remains better positioned than its larger peers to grow share gradually, which should drive above-average top-line growth.

Some analysts believe that the GSEs' (Fannie & Freddie) mandate to share risk with private capital "should be a long-term opportunity for ESNT to invest in credit risk among multiple channels and leverage its solid capital base."

Flow NIW (new insurance written) of $8.7 billion was above estimates for the 2^nd quarter, and the premium margin was up to 57.6 bps from 56.8 bps Q/Q. Operating EPS excludes $0.6 million of realized gains. Operating trends were better than estimates primarily due to a higher premium margin, higher IIF, and lower losses. The single premium percentage was down to 18.4% from 24.6% Q/Q. Insurance-In-Force (IIF) increased Q/Q to $72.3 billion from $67.7 billion in 1Q. Risk-sharing risk-in-force increased to $305 million from $189 million in 1Q and $66 million a year ago, and analysts expect Essent to continue to meaningfully grow risk-sharing IIF.

Compass Point did a write up on Radian's earnings. "We...increase our 2016 earnings per share estimate to $1.63 from $1.49 and our 2017 estimate to $1.83 from $1.81. Our Buy rating is based on valuation that overly discounts the competitive and credit risks posed by the current operating environment. Our revised estimates reflect higher new insurance written (NIW), offset in part, by lower persistency due to the recent uptick in refi activity, which is expected to continue for several quarters. Management raised its NIW guidance due to an increase in the expected growth of the origination market, as well as an increase in the concentration of new home purchases, which are 4x more likely to include mortgage insurance than refinancings."

"Fannie Mae and the MBA expect single family purchase origination volume estimates to increase 11% in 2016 and 2% in 2017, while our NIW estimates for RDN reflect 4% and 3% growth in 2016 and 2017, respectively, due to competitive pressure and the potential for a 4Q16 FHA MIP cut. While earnings did not benefit from a downward revision to the default-to-claim rate on new default notices this quarter, a continuation of the positive trends could lead to an incremental 50bp downward revision in the second half of the year, which is not reflected in our estimates and could provide a $10-$15M positive reserve development, similar to the one recognized in 1Q16."

Arch Mortgage Insurance, the mortgage segment of Arch Capital Group and whose earnings are heavily influenced by Australian results, wrote $6.42 billion of new insurance in the United States, during the second quarter of 2016. From this amount, 76% was from banks and other non-credit union mortgage originators. Net income available to Arch common shareholders for the 2016 second quarter was $205.6 million, or $1.65 per share, compared to $110.3 million, or $0.88 per share, for the 2015 second quarter. Earnings were impacted by losses for Texas hailstorms and floods, and Fort McMurray wildfires. This compares to net income for the 2016 first quarter at $149.3 million and $277.9 million for the 2015 first quarter. Arch MI recorded that gross premiums written by the mortgage segment in the second quarter were 72.7% higher than in the second quarter of 2015, while net premiums written were 80.7% higher than in the second quarter of 2015.

Last but not least, United Guaranty also had a decent 2^nd quarter. New quarterly business at UG rose by nearly half, while the unit's income increased, its book of business grew and defaults declined. Part of American International Group Inc. (AIG), UG reported a 19% rise to $187 million in pre-tax operating income due to the decline in incurred losses from lower delinquency rates, higher cure rates, and an increase in premiums earned from the growth in policies in force. The domestic first-lien new insurance written declined by 15% to $13.0 billion, mainly due to strong refinancing activity in early 2015.

Turning to the bond markets, today we've had the employment data, but yesterday we had a little rally after sovereign borrowing costs around the world declined following the Bank of England's unexpected decision to administer an unexpectedly large dollop of monetary easing to the U.K.'s economy. The price on the 10-year rallied .375, the 5-year improved nearly .250 and MBs prices improved .125-2.50, in line with the 5-year Treasury note.

This morning we've had yet another set of trade figures (the trade deficit widened) but much more importantly we've had the employment data. Housing and jobs drive the economy, and today we learned about jobs. There are three primary numbers that most pay attention to: Nonfarm payroll, the actual unemployment rate, and hourly earnings. Nonfarm Payroll was +255k, higher than the experts forecast, and June was revised higher. The Unemployment rate for July was unchanged from June at 4.9%. And Hourly Earnings were +.3%. Overall the numbers are decent - it is not a bad economy.

For numbers we closed Thursday with the 10-year at 1.50% and after the employment data we're at 1.54% with agency MBS prices worse .125-.250 depending on coupon.

Jobs and Announcements

In sales management job openings, First Commonwealth Bank, a southwestern Pennsylvania Bank, is expanding its Retail Bank and Mortgage Lending presence into Northeastern Ohio. To support this growth First Commonwealth is seeking a regional producing Sales Manager for the Cleveland, Akron, and Canton markets. The ideal candidate should be highly motivated and a proven sales professional to help lead this expansion, and must possess leadership skills to recruit and assist loan originators in becoming top performers. Qualified candidates should send a cover letter and resume to EVP, Mortgage Banking, Stan Foraker (724-933-3988). First Commonwealth Bank is an EEO/AA employer and is a part of First Commonwealth Financial Corporation.

"Forget what the mortgage industry used to look like, we're here to offer you a new view. Lakeview Correspondent is looking for a Northern California Business Development Director to join our dynamic sales team. This territory includes Northern California, Washington, Oregon and Utah. As a servicing aggregator with a compelling value proposition for correspondent originators, Lakeview Correspondent offers consistent agency and government mandatory and flow pricing, as well as a suite of non-agency portfolio products. Improve your view and become part of a company that is positioned to compete today and into the future. Send us your resume at Careers@lakeviewloanservicing. com."

On the IT side a technology Company headquartered in the Western United States is looking for an experienced mortgage technology executive "to head this exciting organization. If you are an entrepreneurial senior level executive that can be responsible for all aspects of a growing an enterprise software business, you need to inquire. Your executive compensation package will include the ability to earn ownership.  The ideal candidate will be a unique blend of executive leadership, sales management, and experience in developing and managing enterprise level mortgage software." Interested parties please submit your resume in confidence to rchrisman@robchrisman. com and specify the opportunity.

HomeStreet Bank is increasing its presence in California. HomeStreet seeking to hire experienced Loan Originators and Operations personnel, particularly in Newport Beach, Brea, Pasadena, Sherman Oaks, Granada Hills, Temecula, San Diego, Fresno, Bakersfield, Walnut Creek, Pleasanton, Sacramento, Roseville and Chico. Some management positions are available as well. Founded in 1921, HomeStreet is one of the largest community banks based in the Pacific Northwest with locations in CA, WA, OR, ID, AZ, and HI and has successfully experienced 450% growth in production since 2011 with production volume of $7.8 billion in 2015 and $900 million in June 2016. HomeStreet Bank offers a competitive compensation and benefits package which includes comprehensive health coverage and an employer matched 401(k) plan, and is an EO/AA Employer including Vets and Disabled. Use this link to search by location and apply online through HomeStreet's career website; questions can be directed to Cathy Nelson, PHR VP, Recruiting Manager.