Summer time… barbecues, time in the sun, fun on the water – unless you’re in Michigan and you believe that rivers flow in circles and one spends three days on it!
Switching gears to the markets, by now most everyone knows about BREXIT, in which the UK decided to leave the EU. This set off waves in global financial markets and raised concerns that the turmoil could lead to a global recession that would trip up the U.S. economy as well. Wells Fargo believes that these fears are somewhat overblown as they relate to the U.S. economy. Wells Fargo's economists do believe, however, that the move will lead to slower growth in the U.S. during the second half of the year. Brexit will not create any direct problems, but it brings up some indirect problems such as slower growth throughout Europe and around the world which would reduce U.S. exports, and U.S. economic policy uncertainty leading to our businesses being more cautious, therefore less expansion, purchasing of new equipment, and less hiring of additional workers.
For all the gloom, the U.S economy still looks pretty solid. The third release of first quarter GDP was stronger than expected, particularly gross 10% domestic income (GDI), which rose at a 2.9 percent annualized rate. This is far better than the rest of the world.
I went to Chili's recently, and to my dismay, they had changed their $20 dinner for 2 to a $22 dinner for 2. I mention this because I went in not knowing that according to Comerica Economic weekly, the consumer prices for June went up 0.2%. However, on $20 that should only be a 40 cent increase in the meal price... the nerve! On to other news, U.S. data released last week was mostly positive, adding to expectations for a rebound in real GDP growth. This data combined with the rally in U.S. equities diminishes two lingering fears: the fear of a sudden downturn in U.S. job growth, and the fear of a spillover from BREXIT. Instead, they see the economy picking up momentum. The Producer Price Index went up 0.5% in June with a push coming from petroleum products. Retail sales increased by 0.6%, beating expectations. Industrial production also beat expectations, increasing 0.6%. The National Federation of Independent Business Small Business Optimism index increased by 0.7 points in June to 94.5, the third monthly gain.
Fannie Mae turned some heads yesterday by setting up to sell debt without government backing. In this case it is a $1.3 billion credit-risk transfer (CRT) deal, expected to price today. It is secured by more than 180,000 mortgages totaling $42.2 billion, according to a Kroll Bond Rating Agency pre-sale report.
Not wanting to be left behind, JP Morgan Chase is out there with a new security as well - about 10% of its new $2.65 billion pool of Chase home loans (Chase Mortgage Trust 2016-2; 55% conforming and 45% non-conforming). The bank is retaining the bulk of the deal and offering only around $270 million of securities for sale. And FirstKey Mortgage also began pre-marketing a new mortgage bond - a rated $975 million securitization of re-performing loans.
Banks have been very happy sitting on their mortgages, especially those originated through their own retail channel and especially jumbo loans. Not only is the income decent, but the cross-selling opportunities good, AND why pay the cost of securitizing the loans? Analysts at Bank of America Merrill Lynch said recently they expect to see only $51 billion of private RMBS (residential mortgage-backed security) issuance this year, down from $60.4 billion in 2015.
Of course the demand by investors in the secondary markets determines the pricing for borrowers in the primary markets, and yesterday U.S. Treasuries didn't do much, and what they did was attributed to the "unwinding" of the Turkish coup-based rally. And the announcement of the mega-corporate new issue from Teva Pharmaceutical which was expected to total $15 billion across six tranches which threw off the supply/demand equation somewhat.
Today for unabashed excitement we had the June Building Permits and Housing Starts figures: +1.5% and +4.8%, respectively, much stronger than expected. We closed Monday with the yield on the 10-year sitting around 1.59%, and after the housing figures we're at 1.56% with agency MBS a shade better.
Upcoming training & events
Are you going to be at Western Secondary in San Francisco next week? "If you are, come visit Model Match at The SQUARE on Wednesday the 27th from 8:00 - 8:50 am, we will be speaking on the topic of how to Grow Production Organically: The Model Match Process. Model Match is an innovative technology platform that supports individual and team hiring goals for companies in the Mortgage and Financial Services Industries. We cracked the code to enable your leadership, management, and business development teams to recruit and retain stronger and more productive production talent (individuals and teams). We have pioneered the Science and also train in the Art to organically recruit and retain production. Through proprietary work flows and processes, we help you define your ideal "Model Match." This is coupled with training to unify the messaging and communication of Value Propositions to be better equipped with a clear and consistent message when it comes to recruiting. Our clients have been able to organize and execute more effectively with our disciplined approach to production recruiting. To learn more you can request a demo. If you are going to be at Western Secondary and would like to meet up, reach out to Steve Rennie to coordinate.
MBA Education's FHA Multifamily Underwriting Training Program is the most extensive and rigorous curriculum of its kind in the Industry. It is designed to set the standard for skills required by multifamily underwriters in the field of FHA lending. If you ready to take your training to the next level, Apply today or visit online to learn more. MBA Education is accepting applications for participation in the FHA MAP program.
California Mortgage Association has upcoming Seminars providing content-rich educational information relating to the mortgage industry and private lending. The next seminar is July 28th and 29th in San Diego. Additional information can be found on the CMA website.
On 8/2 Colorado's CoAMP will host a one-hour webinar featuring Greg Plunkett with Credit Plus. This webinar will cover everything you need to know about Fannie's new Trending Credit Data.
If you're in California, Summer CAMP 2016 will be held at Napa's Westin Verasa. Summer CAMP 2016 provides attendees the opportunity to meet exclusive vendors and learn from the best in the business. Registration opens on-site on Sunday August 7. The Expo Courtyard opens Monday, August 8 and closes Tuesday August 9. Keynotes and break-out sessions also take place Monday, August 8-Tuesday, August 9.
Get ready to inspire your team on August 12th at the CMLA's Developmental Leadership Forum in Colorado. Deadline to participate is Friday, August 5th.
Save the date for California MBA's 21st Annual Western States Loan Servicing Conference, August 14 - 16 in San Diego. Sneak peek details can be seen on the California MBA website.
The Mortgage Collaborative's Summer Lender Member Conference will take place August 21-23 at the Four Seasons Hotel & Resort in Denver, CO. The conference will feature a powerful agenda filled with presentations from top industry leaders, relevant educational breakout tracks, and a series of peer-to peer networking sessions and events. For more information, contact Rich Swerbinsky.
In light of increased and more sophisticated cyber threats, the Federal Financial Institutions Examination Council (FFIEC) has developed an assessment tool to help companies understand, mitigate and manage potential cyber threats. Join the MBA and leading cybersecurity experts for an interactive conversation on how to successfully implement and use the tool for your unique business needs. Register now for FFIEC Cybersecurity Assessment Tool Deep-Dive Workshop September 27 in Los Angeles.
Vendor news of note? It never stops, especially as the reliance upon vendors continues to increase.
In vendor news, Alight Inc. announced that Evergreen Home Loans and First Guaranty Mortgage Corporation (FGMC) have selected the Alight Mortgage Lending platform to streamline branch interaction, support volume goals and increase productivity. Alight Mortgage Lending is the mortgage industry's only platform for real-time multiple scenario analysis. Alight connects to a lender's general ledger and loan origination systems and to capital markets providers to feed data directly into firm financials. Management can run limitless numbers of scenarios and see them ripple through the entire value chain to P&L, balance sheet and cash flow to then make decisions based on an informed, forward view of enterprise financials and operational metrics.
And STRATMOR is pleased to introduce STRATMOR Insights, a free monthly Report that will provide interesting, data-driven articles delivering insights from STRATMOR's mortgage industry surveys, programs and consulting experience. The articles in the report are filled with excerpts and charts from STRATMOR's proprietary mortgage industry research - and provide valuable information to help identify and benefit from the latest trends. The featured article for the July report is a piece written by STRATMOR Group Senior Partner Garth Graham and takes a fresh look at the evolution and outlook for the Digital Mortgage. To view and download the July Report, Click Here. If, you would like to receive STRATMOR Insights, on an ongoing basis, Click Here to Register.
Recently Secure Insight was named by National Mortgage Professional Magazine as one of the top "Visionary Technology Organizations" in the mortgage industry. SSI popularized the phrase "vetting" in the industry and was the first company back in 2012 (then known as Secure Settlements) to develop and manage a process to evaluate and monitor settlement agents for risk. Company CEO Andrew Liput said that SSI will be launching "version 2.1" of its vetting tool sometime this quarter which he claims will include technology enhancements incorporating first-to-market vendor evaluation concepts not previously available from any other vendor management firm. The company also expects that its database will surpass 50,000 settlement agent records by 12/31 which Liput believes is "critical mass" that allows the SSI database to be viewed as an industry utility.
Jobs and Announcements
Michigan Mutual, Inc., an agency direct/seller/servicer/issuer based in Port Huron, Michigan, and much more astute than those involved in the story above, is thrilled about the continued growth and success of its Wholesale teams in California and all across the U.S. Michigan Mutual is currently seeking Wholesale Account Executives to join their sales teams in California, Washington, the upper Midwest and Southeast regions. If you are a capable mortgage professional seeking an opportunity to join a thriving company with a positive culture, strong corporate values, and a clear vision for the future, please contact Director of Wholesale Lending Al Crisanty (916-761-1624) or Karley Warwick. You may also visit MM's careers page to complete an application.
On the retail side, "If you're a producing branch manager or mortgage loan originator, you know that the more loans you close, the better. Assurance Financial has built a reputation for closing loans on time. Our operations staff supports you and your MLO team so you can focus on originating new loans, rather than worrying about closing your pipeline. Assurance is expanding throughout the Southeast and Southwest and looking to hire branch managers and MLOs in Arizona, Colorado, New Mexico, Texas, Arkansas, Louisiana, Mississippi, Tennessee, Alabama, Ohio, Virginia, North Carolina, South Carolina, Georgia, and Florida. For more information, contact Paul Peters, CMB at 225-239-7948 or visit Assurance.
On the Ops side of things, Indecomm Global Services, a leading provider of mortgage technology, training, and outsourcing services is seeking experienced Underwriters. Clients include prominent top tier, mid-tier lenders, and regional lenders as well as title and settlement companies. The underwriter will review regulatory compliance with disclosures, validate data used by an automated underwriting system to decision loans, and perform a comprehensive review of the appraisal report. The underwriter will determine if the loan meets underwriting guidelines, product guidelines, investor requirements and eligibility requirements. Interested candidates should send their resume to HR Manager Candy Mechels.
The Massachusetts MBA spread the word that Karl "Chip" Case passed away. He was recipient of the MMBA Lifetime Achievement award, and was Professor Emeritus at Wellesley College. He was also a founding partner of the Case Shiller Index of home prices, and was well-known both regionally and nationally for his pioneering research on the housing market.