Although the focus of this 6-day a week commentary is residential, it is good to have an awareness of commercial lending - especially as it competes at some banks with residential lending in terms of portfolio usage. Throughout the early 2000s, commercial and multifamily property prices and mortgage debt outstanding grew alongside one another. From January 2001 to November 2007, apartment property prices rose 82% and mortgage debt outstanding rose 91%. Then in 2008, property prices significantly decreased (a 40% drop in property values). Since the beginning of 2010, apartment property prices have grown 92% and multifamily mortgage debt outstanding has increased 19%. Commercial and multifamily property values have risen 68% and mortgage debt outstanding has grown by 6%.
LOs out there are well aware that the NMLS posted a notice regarding proposed changes to the functional specification for all NMLS approved courses regarding webinars. In October of 2014, the NMLS updated the Functional Specification for all NMLS Approved Courses, which require providers to utilize two-way video cameras so both the student and the instructor can be monitored. This requirement became effective on January 1st, 2015. Recently, the NMLS held a conference call with providers explaining the need for the two-way video camera, and many providers expressed their concern with the new standard. For example, providers will have difficulty identifying a vendor that can support the large number of video streams associated with a typical size of a webinar course (40-60 students), they will also have difficulty to continuously display and monitor students and they expressed concerns that the NMLS is mandating requirements that will be difficult for some MLOs to meet. In response, the NMLS said they will accept "rotating" or "random" display of student's presence. Final comments were wrapped up last week, and we will see what is next.
Also as a constant reminder, there are 111 business days left until the RESPA-TILA changes. Secure Settlements conducted a poll of 1743 settlement agents nationwide from 2/20-2/24 inquiring about their preparation for the CFPB's new integrated disclosure rules taking effect on August 1, 2015. 92% of the respondents were familiar with the new rules, however only 36% were familiar with the new closing disclosure form, which is available with instructions on the CFPB website. A majority, 61% said that they had taken steps to prepare for August 1st, while 39% have not done so yet. Interestingly only 33% or one third of the respondents had been contacted by their lender clients to review the new form and process and to coordinate preparation and deliver of the disclosure. Asked how the new rules will impact their business, some of the comments included: the new form is "not necessary," will "create confusion for the borrower," will "increase fees and costs to consumers," will "delay closings," and "seem designed to put small shops out of business." Only a minority of the respondents thought the new form was a positive thing for consumers, the industry and their practice.
There continues to be a lot to think about in recent weeks with regard to Freddie & Fannie...
Last month at the ABS conference comments by Barney Frank (of Dodd Frank fame) were back in the news, and I was reminded of this statement from 2010: : "I hope next year we'll have abolished Fannie and Freddie...it was a great mistake to push lower-income people into housing they couldn't afford and couldn't really handle once they had it. I had been too sanguine about Fannie and Freddie", Barney Frank (D-Mass.), former chair of the House Financial Services Committee (In an interview with Larry Kudlow on CNBC, August 2010 - the interview is worthwhile but you can skip ahead to the 7 minute mark.)
The Community Mortgage Lenders of America (CMLA) renewed its call for Treasury Secretary Jack Lew and chief GSE regulator Mel Watt to take immediate action to recapitalize/cure the under-capitalization of both Fannie Mae and Freddie Mac. "The CMLA in December of last year - as the GSEs were reporting record profits - called for immediate action that would allow them to retain some of those profits to build a reasonable risk capital base. Now, as profits plummet - due in large part, to losses on derivatives - that call gains prophetic urgency. The GSE capital levels, already minimal, will hit zero within just the next few years. Low or zero capital, coupled with declining earnings, could require yet another Federal bailout. Fannie's Chief Executive Officer Tim Mayopoulos, for example, said the 'fact that we don't have a significant amount of capital increases the likelihood' that Fannie will need additional capital from Treasury at some point. The GSE capital depletion is a direct outcome of the repayment terms embedded in the Preferred Stock Purchase Agreements (PSPAs) between the GSEs and the U.S. Treasury. That agreement requires the GSEs to remit 100 percent of profits, which precludes building capital."
The Federal Housing Finance Agency expects early this year to issue new rules governing the sale of long delinquent Fannie Mae and Freddie Mac mortgages and what will be required of the firms that purchase them, the agency's director Mel Watt will tell the House Financial Services Committee in prepared remarks.
Isaac Boltansky from Compass Point Research & Trading, LLC published takeaways from the testimonial FHFA Director Mel Watt gave before the House of Financial Services Committee on January 27th. The takeaways suggest that legislative GSE reform will most likely not occur before 2017 and the FHLB eligibility rule may be softened due to the overwhelmingly amount of negative feedback that was received from the proposal, leading to a finalized rule to be implemented in the latter part of 2015. The proposed finalized G-Fee timeline has remained the same, but a final decision may not be made until mid-2015. The FHFA is still mulling over principal reduction and determining whether a targeted principal reduction effort would be efficacious, but it's plausible that the FHFA may not embrace a large-scale principal reduction program on GSE-backed loans through HAMP. The topic on Mortgage Servicing Rules was barely touched during Director Watt's testimony but he did say that the rule would be supportive of transferring MSRs to appropriate services. The FHFA may also continue to push the GSEs to adopt alternative measures of credit, resulting in a positive impact on credit availability. To read more about FHFA hearing takeaways and learn about Compass Point Research & Trading, LLC, email Isaac at isboltansky@compasspointllc. com.
Watt outlined several plans the agency announced in its 2015 agenda and defended changes it has already made to make mortgages and rental properties more affordable and better shield taxpayers while Congress continues to debate what to do with the two companies. For instance, Watt said in his prepared remarks that the agency will issue a progress report in the coming months on the development of a new mortgage-backed security both companies could one day issue. The agency expects to finalize the structure of the new bond this year and begin planning how to implement it into the market.
Don't forget that a couple weeks ago the Federal Housing Finance Agency (FHFA) announced proposed minimum financial requirements for Fannie Mae and Freddie Mac Seller/Servicers. FHFA anticipates that these minimum requirements will be finalized in the second quarter of 2015, and will go into effect approximately six months after being finalized. FHFA issued a press release on the requirements, and FAQs, both located on the FHFA website. Experts think that the requirements are a non-event has the vast majority of companies in this role are already there.
I lose track of all the housing price indices that come out every month, but this week we have a slew of them. Yesterday S&P/Case-Shiller told us, simultaneously, that home prices grew at twice the rate of inflation in 2014 yet posted their weakest full-year gain since home prices were falling in 2011.
The big news yesterday did not come from Greece but instead was Janet Yellen saying that it is unlikely that the Fed will raise short term rates prior to mid-year. But the Federal Reserve Chairwoman did lay the groundwork for interest-rate increases later this year and sounded positive notes on the economy's performance in the past six months. Mortgage rates, of course, will be determined by supply and demand - the Fed doesn't set those. There are phrases in her testimony that can be interpreted as being hawkish because she makes it clear that the FOMC expects to raise rates in the foreseeable future. There are also phrases that can be interpreted as being dovish because she avoided making a commitment to the timing of the removal of "patient" for forward guidance and offers an ambiguous interpretation of the interpretation of this change in forward guidance.
Today we've had the MBA weekly survey: Mortgage applications fell for the third consecutive week. The Market Composite Index decreased by 3.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 12 percent compared to the previous week. Refis were 62% of all apps, FHA loans were 15%, VA 10%, USDA 1%. Later we'll have more housing-related data with January New Home Sales which printed 481k last month. After closing at a yield of 1.99% the 10-yr is sitting around 1.97% with agency MBS prices a shade better.
Jobs and Announcements
In the job market, Fannie Mae is searching nationally for Directors in their Customer Engagement Division. The impressive job description includes, "Coordinate B2B account strategy execution and direct operations in managing local and/or national customer accounts holistically to maximize relationships, facilitate the contract process, and offer mutually beneficial solutions to the customer. Lead teams effectively, articulate goals, allocate resources, and manage workflow. " We are focused on advancing the housing recovery, improving our company, and leading change that results in sustainable homeownership. Join our diverse, high-performing team and make a difference. Fannie Mae is an Equal Opportunity Employer." For more information, see the job posting here.
Castle & Cooke Mortgage LLC (CCM) is expanding and actively seeking highly skilled and experienced Branch Managers and their teams. "CCM is one of the few lenders in the country that is a direct Fannie/Freddie/Ginnie seller/servicer, which means amazing speed and control of your files. We're looking for branch managers and their teams that are seeking a platform that provides the support, technology, and advances needed to be an industry leader in today's marketplace. The position reports directly to the SVP of Sales & Marketing and requires at least 2 years in branch management experience. Candidates being considered for this position will be subject to additional background checks as required. Please contact Christopher Jensen for further information, or go to Castle & Cooke's website. (EEO Statement: All qualified applications will receive consideration for employment without regard to race, color, sex, national origin, protected veteran status, or disability.)
In California Citizens Business Bank, the Top Ranked Bank in California according to BankDirector Magazine continues to expand their home lending presence across California. Citizens Business Bank, Home Lending is a direct lender specializing in Jumbo mortgages, both QM and non-QM transactions. Being a true portfolio lender, they draw on their existing base of top-tier and high net-worth customers in addition to attracting new customers by leading with their portfolio mortgage products. All residential lending leads referred by the business banking team are driven directly to the home lending team. They are hiring top-producing retail mortgage originators across California to help expedite these bank referrals and to originate self-sourced transactions. For more information about their available positions, email your questions and resume to CareerOne@cbbank. com.
"Having successfully expanded our retail partner network that contributed to more than doubling monthly production volume in 2014, a multi-billion dollar nationally-recognized mortgage lender is once again searching for top-tier mortgage professionals capable of rapidly progressing into a multi-branch Regional Management role. Licensed across the country, our unique regionalized model and superior service offers unparalleled opportunity for growth. The ideal candidate is currently a mortgage broker or an existing retail branch manager with monthly production of $3-5+M. Our system allows the branch/regional manager direct input into operating margins and MLO compensation, while a culture of dedicated corporate support and recruiting assistance allows the manager to focus strictly on sales and branch network growth. Qualified candidates in search of benefiting from superior pricing, 100% branch credits and multi-branch overrides" are encouraged to submit a letter of interest and/or resume to me at rchrisman@robchrisman. com.
A quick congrats is due to Michael J. Dirrane who National MI has selected as its Chief Sales Officer!