Demand for a wide range of consumer and commercial loans increased in the second quarter, according to a Federal Reserve survey of senior loan officers. That suggests the U.S. economy could see faster growth this half of the year. Banks received more applications for auto, home, industrial and commercial real estate loans, as well as credit cards. More banks relaxed terms for commercial borrowing, the survey says.

California is burning, and lenders and investors are aware of it. For example, NewLeaf Wholesale sent out, "Due to the wildfires in Northern California, all properties located in the following counties require evidence that the subject sustained no fire damage: Lake, Yolo, and Colusa. If the property is located in one of the counties listed above with a completed appraisal dated prior to July 29, 2015, a 1004D re-inspection completed by the Appraiser is required to certify that 'the property is free from fire damage'. For appraisals in these counties dated on or after July 29, 2015, the Appraiser must comment on the condition of the property and any effects to the marketability and confirm that 'the property is free from fire damage' detailed in the body of the appraisal. If the appraisal or re-inspection indicates damage, the extent of the damage must be addressed. If the subject property sustained minor damage, the repairs must be completed prior to closing. If the damages are structural or major subject to rebuild, the loan will be declined due to collateral condition. The re-inspection and any extension to accommodate repairs will be charged to the Borrower."

Some brief information on upcoming events...

If you're in the Dallas, Texas area next Wednesday, check out the North Texas Association of Mortgage Professionals (NTXAMP) luncheon on the 12th.

Or if you're in Washington DC around September 10-11, Zelman & Associates is having its annual Housing Summit. "Our 8th annual Zelman & Associates Housing Summit will bring you another robust lineup of distinguished executives from an array of industries related to the housing and financial markets."

And Millennials in the Mortgage Business is the hottest topic in the mortgage industry right now. The rising age of loan officers is forcing companies to consider how to effectively engage millennialsTomorrow, August 6th from 1:00-2:00 PM EST, XINNIX, The Mortgage Academy is hosting a live webinar where "you will learn how to source, recruit and retain millennials in the mortgage business. Don't miss the invaluable opportunity to replenish your sales team. This live webinar is complimentary, but registration is required.

Did someone say Millennials? "Endeavor America Loan Services surveyed loan application data collected from more than 5,400 Millennials in 2014 to gain a true picture of this increasingly important homebuyer."

Here's to re-drawing the map of America. Zillow recently analyzed what the U.S. would like look if the country were re-drawn based upon different factors such as home values, rent prices, affordability, negative equity and population of Millennials. The distorted maps used to illustrate the data in each given region can provide a better idea as to why certain states have a greater impact on the housing market than others. For example, California is largely engrossed when compared on a national scale of home values and rent prices, making other states pale in comparison. Yet when comparing affordability, California almost disappears and Northeastern states become prevalent.

Did someone say "rent" and "Millennials"? Don't forget that a report by Harvard finds 20% of households that make $45k to $75k per year spend more than 30% of their income on rent. The report also found that number rises to close to 50% of households in the country's most expensive cities.

The U.S. Census Bureau reports that Millennials outnumber baby boomers and are more diverse. There are 83.1 million Millennials, representing more than a quarter of the U.S. population compared to 75.4 million baby boomers. Almost half (44.2 percent) of Millennials are part of a minority race or ethnic group but 50.2 percent of those younger than 5 years old in 2014 were part of a minority race or ethnic group. The nation's population as a whole has become more ethnically diverse as 37.9 percent identified as part of a minority group in 2014. The five states with the largest minority population include Hawaii (77 percent), the District of Columbia (64.2 percent), California (61.5 percent), New Mexico (61.1 percent) and Texas (56.5 percent).

According to Freddie Mac, the best way to market to potential homebuyers is through their parents. Millennials tend to ask their parents and grandparents first for home buying advice and view them as their most trusted resource, before asking friends, realtors or banks. Many Millennials currently live at home and can easily engage in home buying conversations with their parents and have had firsthand experience with their parents' financial practices. A recent survey conducted by loanDepot found that 17 percent of parents with children between 18 and 35 years old expect to help their children purchase a home within the next five years through contributing towards a down payment or allowing them to move back home so they can save money. 

Phroogal traveled across the U.S. to educate Millennials on money management. The trip is coined "The Road to Financial Wellness" and began on June 1st in Portland, Maine and ended June 30th in Los Angeles. The team spoke with local residents and Millennials about their financial stories and provided workshops and discussions. Phroogal has teamed up with credit unions, nonprofits, financial institutions and government organizations in order to best educate Millennials about their personal finances and the road trip is sponsored by

Pro Teck Valuation Services' May Home Value Forecast examined whether Millennials are contributing to a revival among inner cities. Data from the American Institute for Economics Research was examined, which ranked cities based upon the amenities important to Millennials and job prospects. Two of the top ten cities were Minneapolis, Minnesota and Boston, Massachusetts. From this data, Pro Teck examined the Lyn Lake area of Minneapolis and South Boston and found that both of these areas have a large population of 25 to 30 year olds, have recovered from the housing crash and should experience future housing appreciation. A metro's affordability will also be based upon the economic state of the area and companies are looking at affordability and moving to areas where there is a large population of college graduates. As more educated Millennials gravitate towards cities like Boston and Minneapolis, many of these areas will experience an urban revival.

The US student loan debt is $1.1 trillion and climbing. Let me say that again, $1.1 TRILLION. This debt isn't just affecting students; it affects the entire US economy. Consumer spending and the housing market are large parts of the US economy and are both affected by this debt. A survey conducted by American Student Assistance (ASA) found some interesting results. Most notably, 75% of respondents indicated that student loan debt affected their decision or ability to purchase a home. 47% said it was the deciding factor, or had considerable impact, on their decision or ability to start a small business. 64% of new private-sector jobs and 49% of private sector employment comes from small businesses.

We need these young entrepreneurs to create these small businesses. Student debt burdens require these individuals to divert cash away from their businesses so they can make monthly payments. This places a roadblock in the economy: the people who create the businesses are staying on the sidelines but we need them in the game if our economy is to grow and thrive in the generations to come. These students coming out of college are taking the first job they can find so they can pay the bills. So, instead of creating new jobs, they are taking jobs away. It's interesting, student loans were created to increase social mobility and invest in our nation's future by ensuring that those without means of securing a higher education could receive government assistance and contribute to the economic strength of our nation but instead the loans are hindering this very principle. One respondent said, "Student debt weighs on every decision I make, from food shopping, to where I choose to live, to how I spend my free time, to what clothes I wear, and ultimately, what career I choose." This causes the US economy to work cautiously and to not screw up instead of thriving and working to win.

With student debt climbing more and more, students are increasingly unable to afford home ownership. (Companies like SoFi do refinance student debt.) That's where a new graduate housing program comes in. By exchanging future home appreciation with a stand-alone shared appreciation contract (SAC) for monthly cash flow, it will help graduates qualify for a mortgage. These SACs are funded by endowment of the alumnus' school. This is a positive for both parties. The graduate can afford a home and the school endowments can diversify investment portfolios at above threshold returns and the schools will also build a positive reputation, better bond with graduates (more likely to donate), and this could attract stronger applicants. How do the numbers work for both parties? By endowments funding annual payments of 2 1/8% of the home's value over the length of ownership will generate a 14%+ IRR if homes appreciate at the national long-term rate of appreciation since 1974 (Freddie Mac). That level of subsidy means if graduates have a 30-year fixed-rate 4.5% mortgage, they will be making the payment on an equivalent mortgage at 1.18%. (For more information on these, since they come in and out of vogue, contact Hal Minot.) 

Is the Fed going to raise short term rates (not mortgage rates, since they don't set those) in September? A lot can happen between now and then, not only in the U.S. but overseas as well, so who knows? But Tuesday Atlanta Fed President Lockhart (a voting FOMC member) told The Wall Street Journal that he thought September could be an appropriate time for a rate hike. As one would expect, the front of the curve bore the brunt of the Lockhart-related selling interest given its higher sensitivity to changes in the Fed Funds rate. By the close on Tuesday the 10-yr had worsened by .5 and closed at 2.21% while agency MBS prices slid .250-.50 depending on coupon.

And of course the press reminded us that we'll have the employment data Friday. It is not expected to show any hint of deterioration in the jobs market. But we've had the ADP Employment (July) release. Projected at +215k in private jobs creation, it came in at +185k - the weakest showing since April. We also had mortgage applications (+4.7%, refis +6%, purchases +3%) and June International Trade (-$43 billion expected, it came in at -$43.8). Still ahead is July's ISM non-manufacturing index. In the early going rates are slightly higher versus Tuesday's close with the 10-year at 2.24% and agency MBS prices worse .125.

Jobs and Announcements

Hiring is certainly ongoing. 1st Advantage Mortgage, a Draper and Kramer company, "is experiencing impressive growth with no signs of slowing down. This year alone we have grown 30%, opening 6 new branches nationwide. We recently welcomed a new President, John Elias, and are currently hiring Loan Officers, Processors, Underwriters, and many other operational positions. Please reach out to Scott Wells or visit our recruiting site at www.join1am. com."

Academy Mortgage (one of the top independent purchase lenders in the country as ranked in the 2014 CoreLogic Marketrac Report) is continuing to expand across the nation. On the west coast, Mike Wheeler is now the company's North Valley/Sacramento District Manager. Well-known for coaching and developing sales teams for mortgage lenders and Fortune 500 companies, Wheeler is already seeing success in the area. In the Lone Star State, Todd Boeding has joined Academy as North Texas District Manager, bringing more than 12 years of industry experience and 14 years of military service to the company. And in the mid-west, the dynamic duo Stephen Marrs and Chris Terry are now leading Academy's Greater Detroit Area Branch. Loan Officers, Branch Managers, branches, and firms interested in joining Academy should contact National Recruiting Manager John Owens."

And Paramount Mortgage (PRMG) spread the word that it has been ranked "Number 1 of the 50 Best Mortgage Companies to Work for in America" (as published in the 2015 summer issue of Mortgage Executive Magazine!). "At PRMG, we firmly believe that progress is not possible without change. As our industry evolves, we know that by helping everyone we work with to be successful on a daily basis is paramount to ensuring our future. To all of our employees and business partners, we'd like to say thank you for another successful year at PRMG-and a special thank you to our originators!"