U.S. auto loan debt hit a record $1.16 trillion in the fourth quarter of 2016. That averages out to $6,100 in car payments per licensed driver. In fact, the NY Federal Reserve reported that household debt in the U.S. is set to surpass the 2008 peak, led by a sharp increase in student loans. Total consumer debt hit US$12.6 trillion in the 4th quarter of 2016, versus the US$12.7 trillion peak in Q3 2008. Student loan debt, which accounted for 5% of total debt then, now accounts for 10.4% - and it has jumped 170% since 2006 - about 30% of borrowers who graduated between 2009 and 2011 have defaulted on their loans. Mortgage and credit card debt account for smaller percentages of total debt than previously.
Credit and Student Debt Trends
Industry vet John Robbins reminded me of a Senator Alan Simpson quote: "If you have integrity, nothing else matters. If you don't have integrity, nothing else matters." 80% of all mortgage borrowers are completely honest on their loan applications, according to a study by UBS. Then there's the other 20%: the "inaccuracies" generally fall into four buckets: overstated income, underreported debt, underreported expenses, and overstated assets.
New research from the New York Fed confirms a lingering worry for the banking industry: More prime-age, college-educated borrowers are delaying the decision to take out their first mortgage as they focus instead on paying off their student loans.
While the first-time homebuyer share of home sales has increased, it is still below typical levels, and many point to student debt as one obstacle for potential buyers. Since 2010, direct lending by the Federal government has dominated student loan originations. Student loans programs from the government with fixed payments for the life of the loan accounted for more than 55 percent of all direct Federal loans in repayment in 2013 but fell to a share of less than 40 percent by the end of the 2016 fiscal year.
There are a variety of other repayment plans which are becoming increasingly popular and may prove to make it difficult for mortgage lenders to underwrite the monthly debt obligations of applicants with student loans. The size of loan payments (and the potential for eventual loan forgiveness) may be conditional on future actions and employment of borrowers. Given the complexity and uncertainty of underwriting mortgages, coupled with pressure to meet strict regulatory guidelines, lender and investor policies with respect to student loans can serve to limit access to mortgage credit.
Up a little, down a little. After improving (the 10-year hit 2.31% but closed at 2.35%) rates were up ever-so-slightly Tuesday as the Trump administration rekindled talk about an infrastructure plan, thought to be inflationary. Transportation Secretary Elaine Chao said that a proposed plan is probably coming May. News broke that Richmond Fed President Lacker would resign his post immediately due to improper communications with a Medley Global Advisors analyst back in October 2012. The investigation into a phone call between Lacker and the analyst has been ongoing for years.
This morning we've had last week's mortgage applications data. Overall apps were -1.6%, but refis were the bulk of that and continue to slide, down over 4% and are down 33% versus a year ago. (Purchases were +.7%.) No one wants to refi out of those 3.5% 30-year fixed-rate loans! We've also had the March ADP Employment Change (+263k, stronger than expected). Coming up are March ISM Services and the latest minutes from the FOMC meeting. We start the day with rates slightly higher versus yesterday: the 10-year is yielding 2.37% and agency MBS prices are down a tad.
Tomorrow, on Thursday, April 6th, at 2PM ET/11AM PT, AMLG will be facilitating a free webinar in partnership with The Mortgage Collaborative entitled, "The Loan Originator Compensation Rule - What You Need to Know to Prevent Steering and Protect the Consumer in 2017." The webinar will be facilitated by AMLG's Senior Managing Member, James Brody, who will be discussing the various updates and developments regarding the regulation and enforcement of the LO Compensation Rule and how it continues to trouble lenders, prohibited and permissible LO compensation structures, and common pitfalls to avoid to reduce costs caused by LO mistakes. "If you want to make sure you are preventing steering and protecting the consumer, or if you want to learn more about the LO Compensation Rule, be sure to join us tomorrow for a comprehensive webinar. Click here to register! Otherwise, should you have any follow-up questions regarding the webinar, contact Mr. Brody.
One more week to register! The revised HMDA reporting rule is upon us and hopefully your company has implementation projects well underway. There is a lot of consider and plan for across your business policies, processes, system and organization while ensuring your data is complete and of the highest quality for reporting. Please join Newbold Advisors, LLC and Gooi Mortgage for a free one hour webinar on Wednesday, April 12 at Noon ET to review the rule, discuss implementation considerations and get some planning tips. You can register here for "HMDA Reporting - What, Why, Who, When."
Don't miss National Mortgage Professional Magazine's complimentary webinar titled "The Billion Dollar Turndown Market - the Best New Business Strategy" this Thursday, April 6th at 2PM ET presented by Sales Boomerang. See for yourself how top originators and forward thinking up-and-comers are positioning themselves to lead the future of the mortgage industry. Top originators have figured out a way to keep their prospects away from competitors. The new battle ground for the highest quality opportunities will be fought over YOUR TRACKING TURNDOWNS! Click here to sign up for this COMPLIMENTARY Webinar!
If you're in Southern California on Tuesday night, April 11, the North San Diego County Escrow Association and Notary Near You are hosting "Bring Your Favorite Real Estate or Mortgage Broker to Dinner." Cocktails at 5:30, dinner at 6:15 at the Shadow Ridge Country Club in Vista, and yours truly will be speaking afterward. Please contact Tracie Gressmen for more details and registration.
This week the newly formed National Association of Minority Mortgage Bankers (NAMMBA) will be holding the largest mortgage conference in the Southeast, NAMMBA CONNECT 2017, from Thursday, April 6th to Sunday April 9th at the Atlanta Marriott Buckhead in Atlanta, GA. The mission of NAMMBA is to increase the engagement of women and minorities in the mortgage industry. If you are in sales, operations, servicing, or other roles supporting the mortgage industry this conference is for you and as a result of sponsorship by National Mortgage Professional Magazine you can attend for FREE! This conference is packed with a program that includes includes 20 speakers and 2 nightly networking events. Register here, and use promo code: NMPFREE.
Franklin American Mortgage Company published its Wholesale April training calendar. Training opportunities include but are not limited to: "Mortgage Fraud", "understanding the Student loan debt barrier" and "HomeReady is a home run".
Join the NMMLA for its April 13th Luncheon with Albuquerque Mayor, Richard J. Berry.
Are you interested in an overview of the 2016 financial and operating results and metrics from the Richey May Select Benchmarking program? Register for the April 26th webinar. Participants will learn about financial trends affecting independent lenders across the country as they continue to plan and make decisions aimed at improving efficiencies, increasing margins and controlling costs.
MGIC is partnering with XINNIX to bring you and your Production Management Team a series of powerful webinars to help you succeed in cultivating purchase business, recruiting successful originators and giving insight into our biggest resource for new talent: Millennials.
National MI has training opportunities: Tuesday, May 2nd - Improving Outreach with Asian American Homebuyers. Thursday, June 15th - Facebook to the Max!
The Council for Inclusion in Financial Services in partnership with the Mortgage Collective is hosting Financial Services Industry Week from July 29 - August 3 in Dallas. "We expect 5,000 consumers interested in insurance, wealth management, consumer banking, and mortgage banking. Participants will share pain points when it comes to inclusion and engaging the new consumer, Millennials. For our industry to thrive, we need to be an industry of inclusion, including products, services, career opportunity to how we build our business models to account for the diversity in consumer preferences." Additional information can be had by contacting Brandon Kirkham.
Jobs and Announcements
"Due to remarkable growth at Embrace Home Loans, we have exceptional opportunities for mortgage sales professionals with a background in either direct or retail lending. Embrace is the place retail sales professionals can expect to thrive both personally and professionally through our values based culture, respect and awareness of the challenges facing today's loan officers, a full catalogue of products and competitive compensation/benefits packages. Licensed in 46 states plus DC, Embrace ranks in the top 25 private mortgage lenders and top 25 FHA originators in America. For 10 straight years Embrace has achieved a 98% Customer Service Rating and is 7 times recognized by Fortune, as a Top 25 Mid-size Companies to Work for in America. If you are interested in working with a supportive, dynamic and productive company contact Jeff McGuiness, Chief Sales Officer, or check out Embrace Home Loans."
On the retail side, "What are you doing to make 2017 your best year? What is your company doing to help you originate more loans and grow your business? Did your company just lay off a significant amount of people? Did they close their call centers? Are they reducing their operational team? Although we have seen negative press about many banks this year due to the interest rate spikes post-election, I am happy to share with you that there are banks that are growing and investing in their people. If you are concerned about your current situation or just looking to see what else is out there, you should not hesitate to send me your resume. I am working with a National Lender that is aggressively growing and opening new branches and growing its operational teams." Please submit your resume to me for an introduction.
Inlanta Mortgage, Inc. recently announced its expansion into the Colorado & Texas markets as well as an increased presence in the Midwest. Inlanta's recent growth also includes opening four new branches and making several additions to current offices and its business development team, including recent hires of seasoned mortgage professionals David Williams and Brian Jensen as Regional VP's, and the promotion of Kevin Laffey. Inlanta Mortgage SVP, Chad Gomoll, emphasizes that, "We are looking for people with an entrepreneurial spirit who want to grow their business and see a long-term plan for their success. We want people who will fit our culture, and we have the platform built to take them wherever they want to go." For more about opportunities for growth with Inlanta, contact David Williams to learn more about branch manager and loan officer opportunities in Texas & Colorado, Brian Jensen for the Midwest market, and Kevin Laffey, recently promoted to Regional Production Manager, for the KS, MO, and IA markets.
Recognized as one of the top performing banks in the country, Northpointe Bank is pleased to announce Neil Armstrong has joined as SVP, Community Lending. Armstrong will lead Northpointe's Community Lending platform, an origination fulfillment channel that offers a completely private label and customer-branded solution focused on community banks and credit unions. "Most of us are aware of the high compliance costs in our industry. Not only does Northpointe Community Lending scale the regulatory burden so it is affordable for our customer, we also leverage our leading technology so community lenders benefit without the need for large capital investment or systems upgrade", comments Neil Armstrong. Armstrong has over 20 years of mortgage banking experience with a deep understanding of technology, business processes, cost management and business development. He also earned his Accredited Mortgage Professional certification from the Mortgage Bankers Association. To learn more about Northpointe Community Lending platform, contact Neil Armstrong (919-270-5324).
Texas Capital Bank, N.A. announced that Susan King has been promoted to VP and regional manager for the Northwest region of its Correspondent Lending group. Susan demonstrates a relentless drive to create the ideal client experience and possesses an expertise in mortgage lending through her 24+ years in various roles throughout the industry. Susan will oversee 11 states and support correspondent clients across the upper Northwest from Northern California to Minnesota. Texas Capital Bank's Correspondent Lending group is part of its Mortgage Finance division which specializes in supporting mortgage lenders nationwide with warehouse and MSR credit, liquidity and banking solutions. Texas Capital Bank is consistently recognized as one of Forbes' Best Banks in America.