I am in Portland, Oregon today, but I flew, of course, commercial. In things to note, in Davos, Switzerland, where the famous finance folks are, 1,700 private jets were counted. Among other things, the owners were there to discuss global warming. Go figure.
The FHA and FHFA news in the last month have moved servicing values, as has the decline in rates: is every loan above 4% going to pay off early? Companies continue to sell blocks of servicing. Phoenix Capital had two deals to start the New Year; the first being "Project Frontier" which is $75-$125 million per month flow Fannie Mae & Freddie Mac mortgage servicing rights. Bids should be based upon: 86-89% Fixed 30yr; 11-14% Fixed 15yr, $337-$355k loan average, WaFICO 748-758, WaLTV 63-67%, 100% CA Geo, with 100% wholesale originations. Bids for this deal are due in writing on Thursday, January 15th. The second is "Project Bear Claw" which is $330M bulk Fannie Mae mortgage servicing rights offering. The portfolio is 100% FNMA FRM, 83% 30yr term, 17% 15yr term, 4.11% WAC, WaFICO 734, WaLTV 70%, $274k average loan balance, with 100% Ca originations.
Yes, in attempting to supply meaningful MSR content in the commentary, I normally have to leave out most of the pool characteristics to fit within the confines of my attention span...plus, I pay myself by the word and I like to think of myself as a "company man." As always, feel free to contact a rep from the servicer, for the full bid tape. MountainView Servicing Group, LLC is the seller-advisor of a $1.2 billion FHLMC/FNMA non-recourse servicing portfolio. The pool of 100% 1st lien fixed rate mortgages have: 763 WaFICO, 73% WaLTV, 3.57% cumulative WAC, Low delinquencies, Avg Bal $192k, with state distributions of California (22%), Arizona (7%), Washington (6.4%), and Colorado (6.2%). Bids for this package are due January 28th at noon....Phoenix Capital has two more "projects," the first being "Project Icelandic" which is a $911M bulk Ginnie Mae servicing rights offering. Icelandic is 94% GNMA II, 6% GNMA I, 4.136% WAC, 765 WaFICO, 94% WaLTV, Avg Bal $207K, with a top state distribution of California (30%), Washington (8%), and Arizona (7%) AZ. Written bids are due on January 27th. "Project Pau" is a $50-100m/mo Bifurcated Flow MSR transaction; the deal will be 100% bifurcated by FNMA/FHLMC, Serviced in-house on Encompass 360, 96% FNMA, 4% FHLMC, 86% Fixed30, Avg Bal $257-262k, WaFICO 756; WaLTV 80%, 33-34% Virginia geography, 100% Retail Realtor originations.
(No, rumors of Phoenix Capital auctioning off the rights to name one of its projects are unfounded.)
The CFPB never sleeps. Like rust. Before the New Year holiday the CFPB made a few alterations to a couple of asset-size exemption thresholds. The Bureau has increased the exemption threshold under HMDA/Regulation C which is currently set at $43 million. Banks, savings associations, and credit unions with assets at or below $44 million as of December 31, 2014 are exempt from collecting HMDA data in 2015. Also, the CFPB has changed the asset-size threshold under TILA/Reg-Z for certain small creditors operating primarily in rural or underserved areas to qualify for an exemption to the requirement to establish an escrow account for higher-priced mortgage loans. The threshold is currently set at $2.028 Billion. Loans made by creditors operating primarily in rural or underserved areas with total assets of less than $2.060 billion on December 31, 2014 that meet the other Regulation Z exemption requirements will be exempt in 2015 from the escrow account requirement for HPMLs. Both changes were published, and can be found in the Federal Register.
And the CFPB wants you! Actually, it is dubious whether or not they want brokers - or any actual lender - to provide it formal advice, but the CFPB is accepting nominations for its advisory board and councils.
But the news from yesterday is what caught everyone's attention - especially any Realtor, lender, or builder that has a written agreement with any other financial institution. The CFPB and the Maryland Attorney General announced actions against Wells Fargo and JPMorgan Chase for engaging in illegal marketing services with a now-defunct title company, Genuine Title, between 2005 and 2014. In addition to the banks, the bureau and Maryland took action against a former Wells Fargo employee and his wife for their involvement. All in, the penalties for the enforcement total more than $35 million. Yes, there was a "kickback scheme" mentioned where Genuine Title gave the banks' loan officers cash, marketing materials and consumer information in exchange for business referrals.
The CFPB's investigation identified more than 100 Wells Fargo retail loan officers in at least 18 branches, largely in Maryland and Virginia, as participants. The bureau alleges that these loan officers referred thousands of loans to Genuine Title. Additionally, the CFPB alleges that Wells Fargo had multiple warnings, including a federal lawsuit explicitly alleging the existence of such agreements, but the bank failed to take action to stop the practices and did not have an adequate system in place to identify these violations.
How does the cost break down? Under a proposed consent order, Wells Fargo would be required to pay $11.1 million in redress and $24 million in civil penalties. The bureau also filed an administrative consent order against Wells Fargo prohibiting future violations. And the CFPB mentioned an individual: the CFPB and Maryland also took action against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen. The bureau alleges that, while at Wells Fargo, Cohen received marketing materials and took substantial cash payments in exchange for referrals. Rather than pay Cohen directly, Genuine Title made payments to Cohen's then-girlfriend, Oliphant Cohen, the release alleged. Under the proposed consent order, Cohen and Oliphant Cohen would be required to pay a civil penalty of $30,000, and Cohen would be banned from participation in the mortgage industry for two years. And at JPMorgan Chase, the CFPB alleges that at least six loan officers in three different branches in Maryland, Virginia and New York were involved, referring settlement business to Genuine Title on almost 200 loans. The bureau also alleges that JPMorgan Chase did not have an adequate system in place to ensure that its loan officers were following the law. Under a proposed consent order, JPMorgan Chase would pay approximately $300,000 in redress and $600,000 in civil penalties. The bureau also filed an administrative consent order against the bank, prohibiting future violations.
So now we have attorneys, senior managers, and loan officers all racing to read the order and also last year's Lighthouse Title consent order. RESPA News reported that, "In its order, the CFPB noted the traditional definition of 'thing of value' is 'any payment, advance, funds, loan, service or other consideration, including, without limitation, monies; things; discounts; salaries; commissions; fees; duplicate payments of a charge; stock; dividends; distribution of partnership profits; franchise royalties; credits representing monies that may be paid at a future date; the opportunity to participate in a money- making program; retained or increased earnings; increased equity in a parent or subsidiary entity; special bank deposits or accounts; special or unusual banking terms; services of all types at special or free rates; sales or rentals at special prices or rates; lease or rental payments based, in whole or in part, on the amount of business referred; trips and payments of another person's expenses; or reduction in credit against an existing obligation.' But the bureau took that definition one important step further. 'Entering a contract is a 'thing of value' within the meaning of Section 8, even if the fees paid under that contract are fair market value for the goods or services provided,' the bureau said. "Entering a contract with the agreement or understanding that in exchange the counterparty will refer settlement services related to federally related mortgage loans violates Section 8(a).'"
Don't ask me. Ask your attorney. Don't have, or can't afford, an attorney? Don't want to? Now you know why many lenders are saying "enough is enough" and either leaving the business or are going to work for a larger company that can afford all of this. And one wonders what impact the CFPB will have on the entire body of contract law across any business in the United States.
I was recently asked who's buying heavily discounted non-performing agency mortgages, and the answer is pretty straight forward: anyone chasing yield who may have a view on where the markets are headed. One such firm is Angelo Gordon & Co. of New York. Recently the firm was noted to be in the process of raising capital, Bloomberg writes, "....[looking for] as much as $750 million for a fund to invest in soured mortgages as banks and government agencies sell boom-era home loans at discounts. The $26.5 billion investment firm, founded by John Angelo and Michael Gordon, is offering the fund through JPMorgan Chase's private client group, according to a marketing document obtained by Bloomberg News. The firm is targeting $500 million to $750 million and will primarily invest in non-performing and previously delinquent mortgages." As most know, the price for non-performing mortgages made prior to the economic recession (pre 2008) have soared over the past few years and demand has steadily increased as equity firms chase arbitrage. Bloomberg continues, "investment firms including Lone Star Funds, Oak Hill Advisors and One William Street Capital Management targeted the debt seeking higher returns than those available on other fixed-income investments. The supply remains "favorable" for investors, with about $40 billion available annually to buy over the next few years, according to a report last month by Compass Point Research and Trading."
In the good news column, home prices rose .8% in November, higher than expected according to the FHFA. On a year-over-year basis, prices are up 5.3% and are close to their April 2007 peak. But all real estate is local (look how downtown areas are on fire) and New England was negative while the West Coast was highly positive. Note that the FHFA Home Price Index only looks at houses with conforming mortgages so it does not include the snubbed jumbo loan borrowers.
Remember the old days when news in the United States moved the markets than news from overseas? Today we will have December's Existing Home Sales and Leading Economic Indicators. But yesterday the European Central Bank shook things up - at least in the Treasury market. Mortgages did not jump on Mr. Toad's Wild Ride. In fact, the 30-yr MBS prices finished the day flat to higher two to four ticks.
For numbers, volatility has indeed picked up - much of it happening overnight. For example, here in the United States we had a 1.90% close on the 10-yr T-note, and we're back down to 1.83% this morning due to overseas gyrations, and agency MBS prices are better between .125-.250.
Jobs and Announcements
Lenders are growing. "Over the past few years, we've been razor-focused on strong service for the coastal California market and have originated over $11 Billion. JMAC is ready to expand nationwide! JMAC is actively recruiting Account Executives in CA, AZ, OR, and WA, a Regional Sales Manager for Texas/Colorado, and another RSM for East Coast. Our new AEs have transitioned quickly and our last hire brought in almost $8 million in submissions during her second month. Please send any resumes to careers@jmaclending. com and we will respond promptly."
An FDIC Bank branch located in the Sacramento area is looking for a senior underwriter with advanced analysis skills in the areas of credit, layered risk, and income. The person must have the ability to underwrite loans at a national level and in all markets, and can work from home. FHA - Direct Endorsement (DE) designation required VA - Lender Appraisal Processing Program (LAPP) and/or Staff Appraisal Reviewer (SAR) designation(s) required experience with Desktop Underwriter (DU) or comparable automated underwriting system required. Basic computer skills required. Experience with Encompass is a must. Minimum of 5 years mortgage underwriting or lending experience required. Please submit confidential resumes to me at firstname.lastname@example.org.
And Jordan Capital Finance has openings in TX, FL, NY, NJ, GA, MN, OH, SC, NC, CO, PA, DC, MD and VA for Business Development Directors who will be responsible for generating loans in their major metropolitan markets. JCF provides private money financing for investors who buy, renovate, sell, and rent residential real estate. Business Development Directors play a very important role in revenue generation for the Company, closing loans while being well-compensated for loan volume. The Company will provide leads. Jordan Capital operates in 25 states and is embarking on a very aggressive growth strategy that includes the addition of new loan products, and increased distribution channels (retail and wholesale). "JCF is extremely well funded by Garrison Partners, a leading New York private equity firm. The successful candidates will be self-starters and must have outstanding business and academic track records and a very strong work ethic." If interested, contact Jordan Capital at careers@JordanCF. com.