The FDIC reports banks paid $37.5 billion in taxes through Q2. That’s a lot. In individual tax news, the Mortgage Bankers Association sent out a joint trades letter urging Congress to act on real estate tax extenders (mortgage debt forgiveness and MI premium deductibility).
Jumbo news? Yes, there is.
In today's competitive housing market, Sierra Pacific Mortgage understands that it's important to have options for the jumbo buyer. That's why management just introduced Sierra Choice Jumbo, a classic jumbo product with bells and whistles and Sierra Choice Jumbo Plus, a non-QM specialty product. The Choice product offers a unique 90% LTV up to $1 million, first-time homebuyers can use it up to $1 million and it offers construction to permanent financing option. The Plus is a non-QM product that allows non-occupant co-borrowers.
Beginning November 14, AmeriHome's Eligibility Reviews will not be available for loans with new locks taken in the Core Jumbo program.
California wholesaler MWF announced a change to the Jumbo 2 Preferred Payment Plan option. Borrowers may now select a financial institution of their choice for the automatic payment withdrawals. The Preferred Payment Plan allows for a .250% interest rate reduction on the loan when the payment is automatically withdrawn (also known as ACH) from a checking or savings account. A completed Preferred Payment Plan Enrollment Form must be included in the loan package. The Preferred Payment Plan Enrollment Form can be found on MWF's websites.
Banks continue to put jumbo loans into their own portfolios, especially given the quality of assets and the cost of securitization. And there is plenty of bank news, not all of it helping the job market. Research by S&P Global Market Intelligence finds US banks and thrifts closed a net 732 branches in Q3 vs. 481 in Q2 and 337 in Q1. This leaves the industry total at 91,624 as of the end of Q3. And some argue, given internet banking, that branch numbers will continue downward.
Research by Bank Director finds mergers of equals have made up 2.4% of total bank M&A activity since 1990, but from Jan to Aug of this year that jumped to 4.4%. And mergers & acquisitions have certainly continued over the last few weeks. Glacier Bancorp, Inc. (Kalispell, MT) announced its entry into Arizona with the acquisition of TFB Bancorp, Inc. (Yuma, AZ). Centennial Bank ($9.7B, AR) will acquire Landmark Bank ($462mm, FL) for about $88.5mm in cash (21%) and stock (79%).
In South Carolina CresCom Bank ($1.6B) will acquire Greer State Bank ($380mm) for $45.1mm in cash (10%) and stock (90%) or about 1.6x tangible book. In Virginia Bank of Lancaster ($463mm) and Virginia Commonwealth Bank ($324mm) will combine in a merger of equals transaction. Lancaster will own 51% and Commonwealth will own 49%. In Florida Seacoast National Bank ($4.5B) will acquire Gulfshore Bank ($331mm) for about $54.8mm. Nicolet National Bank ($2.3B, WI) will acquire The First National Bank - Fox Valley ($475mm, WI) for $76.6mm in cash and stock or about 1.65x tangible book. The Little Bank ($367mm, NC) will acquire Union Bank & Trust Co ($298mm, NC) for about $30.7mm in stock or roughly 1.29x tangible book.
Switching to everyone's favorite regulator, research by Bank Director finds the CFPB (which now has 1,500 employees, of which about a third are in the enforcement division) has filed 150 enforcement actions, and captured $11.7 billion in restitution since its inception. And the government agency continues to be busy.
Remember last month when the CFPB put out a final rule to create comprehensive consumer protections for prepaid accounts under Regulation E, which implements the Electronic Fund Transfer Act; Regulation Z, which implements the Truth in Lending Act; and the official interpretations to those regulations. The final rule modifies general Regulation E requirements to create tailored provisions governing disclosures, limited liability and error resolution, and periodic statements, and adds new requirements regarding the posting of account agreements. The CFPB put out a factsheet that highlights the Prepaid rule's effective dates and related exceptions and accommodations.
Residential lenders of all shapes and sizes are interested in what will happen to the CFPB in 2017. And more generally, what the impact of changes to Dodd-Frank will be on banks.
This week, Sen. Elizabeth Warren, D-Mass., who served as special adviser for the CFPB from 2010 to 2011, said a hard-fought battle to defend Dodd-Frank reform is likely on the horizon, Politico reports.
So yes, not only is the CFPB coming under more and more political scrutiny, but the judicial branch of the government also took aim at in the PHH vs. CFPB court case. The agency has until Nov. 25 to appeal that decision, either to the entire D.C. Circuit or the Supreme Court. It is widely expected to do so.
To be sure, Cordray might also offer to leave of his own accord. That sort of move is relatively common at the start of a new administration, even for independent agencies. For example, it was widely reported in 2009 that then-Federal Deposit Insurance Corp. head Sheila Bair offered to step aside if President Obama wished to put his own person in the job, but he opted to keep her in the post. But most observers said it is doubtful that Cordray, whose term runs through July 2018, would leave voluntarily.
Kate Berry with American Banker writes, "What's more likely is that Trump will add momentum to legislative efforts to rein in the CFPB. The banking industry has been pushing a bill that would create a five-person board for the agency and subject it to congressional appropriations."
Credit unions, taking a page from NAR, are looking to limit federal regulations coming from CFPB. The Credit Union National Association (CUNA) publicly requested the CFPB wait until Trump assumes office to publish new or pending regulations. It is difficult to know whether CUNA is channeling a President-Elect Trump. As the article states, Trump told the National Association of Home Builders in August that the volume of regulation is "horrible." In fact, Trump would have the authority, through the executive order process, to place a moratorium on all new federal regulations.
Lenders and residential loan investors continue to tweak their policies and procedures based on CFPB preferences and actions, and the wont of other regulators.
AmeriHome has reviewed the October 12th CFPB guide revisions about the know before you owe mortgage disclosure rule. Thus, AmeriHome has added its own clarifications to the instruction for completing consummation Disclosuressection of its TRID quick reference guide.
Effective immediately, NewLeaf Wholesale no longer requires Brokers to submit a Fee Worksheet at the time of Loan Registration to issue the Initial Loan Estimate/Disclosures. When Brokers do not provide the Fee Worksheet, NewLeaf performs an internal fee quote and issues the Initial Loan Estimate/Disclosures based on the quote. NewLeaf's process for Loans submitted with a Broker-Issued Initial Loan Estimate remains the same.
Nationstar Mortgage focused on suspense deficiencies identified based on loan deliveries for the month of September.
1003 signature requirement from NYCB Mortgage: If the application is for joint credit, the borrower and co-borrower must provide a signature on page one of the 1003 and check the appropriate boxes.
No doubt about it, complying with regulations is expensive - but how expensive? Yesterday the commentary mentioned a report from home builders about the impact that the cost of regulation was having on potential home buyers. The statistic prompted economist Elliot Eisenberg to send, "That NAHB number purporting to show the number of households priced out of home due to the impact of regulations should be taken with a grain of salt. What that number actually shows is the number of all current households including both renters and owners that can no longer afford to buy a house. That means that if you currently own a house, per the NAHB calculation, you may no longer be able to afford to actually buy one. But, of course, you already have one! So what the number is saying is at best quite murky and philosophical. A far better number to measure might be to calculate how many current renters can no longer afford to buy a home compared to the last time period! That number would give us an inkling about how many new mortgages might not be written going forward, and that might be actionable information. To give some perspective, there are about 115 million households in the US and about 74 million own a home with the remaining 41 million renting. What matters is what the 41 million renters may do, and how many of them may or may not become owners, as we can help them get a loan."
Of course, the CFPB is not the only body out there instigating change. The Justice Department has widened its investigation of Fulton Financial's mortgage lending practices to include four new units. The $18.7 billion-asset company, based in Pennsylvania, disclosed in its quarterly filing that the Justice Department, which had only been looking at Fulton Bank, has expanded its probe to including Fulton Bank of New Jersey, Columbia Bank, and Lafayette Ambassador Bank. The four banks conduct business throughout the mid-Atlantic region, with branches located from New Jersey to Virginia.
Per an article in American Banker, Fulton "said it is cooperating fully with federal authorities, adding that it is unsure how long the investigation will last or how much it might cost to resolve the issue or pay any penalties or fines." (Does anyone ever issue a press release saying they are not cooperating with federal authorities?)
"Since first disclosing the investigation more than a year ago, Fulton has unveiled a program to promote affordable housing, financial literacy and economic development in its markets. The 'Fulton Forward' effort includes a low-down payment mortgage product, grants that can be applied toward closing costs or down payments and a partnership with Operation Hope aimed at improving financial literacy in underserved communities.
"Fulton last month tapped William 'Smokey' Glover, a Fulton Bank executive, for the newly created position of director of fair and responsible banking. His duties include the day-to-day management of Fulton Forward.
Turning our attention to the bond markets, and therefore interest rates, U.S. Treasuries had mixed results yesterday as the yield curve flattened and everyone analyzed the mixed bag of economic news this week. Remember that Tuesday we had a strong Retail Sales report, and Treasuries are obviously very oversold over the past week - so you'd expect some kind of bounce. By the way, a rate hike on December 14 by the Federal Open Market Committee is a forgone conclusion.
This morning we have Fed Chair Yellen's testimony before Congress's Joint Economic Committee. We've also had the October CPI (Consumer Price Index) telling us that inflation at the consumer level was +.4% as expected. We've also had, with one week until Thanksgiving, October Housing Starts and Building Permits (very strong at +25.5%, a 9-year high, and 1.229 million), Initial Jobless Claims (at 235k - very strong), and the November Philadelphia Fed (7.6 - positive). That is quite a bit! After these strong numbers, we find the 10-year's risk-free yield at 2.25% with agency MBS prices worse .125 versus last night.
Jobs and Announcements
In personnel and job news, CNN Mortgage is excited to welcome Steve Atwood! Steve most recently served in Retail Production Manager, National Production Manager, and Division Manager roles. He joins CNN Mortgage to further develop the California market. If anyone would like to join Steve on the "California Adventure," please contact Dorinda Deimund (480.281.8305).
CapWest Mortgage, known nationally for its industry-leading technology and innovative suite of products, is seeking a self-motivated, energetic Branch Sales Manager with a proven track record of success within the consumer-direct mortgage space. "Our ideal candidate has the knowledge and drive to scale an existing high-volume sales team inside a cloud-based call center, in addition to 5+ years of experience managing and growing mortgage talent. An analytical mind, attention to detail, and solid command of technology are required. We are looking for the absolute best in the nation - if you believe this is you then contact Yashicka Rose, Director of Human Resources.
First Guaranty Mortgage Corporation is (again) looking to expand its Correspondent Lending Division by aggressively seeking talented account executives nationwide. The 25-year old lender recently experienced a record month as well as significant growth with their Specialty Products. FGMC uses a sales and trading hybrid platform, focused on providing customers both standard and advanced correspondent mortgage delivery options. It's a national approved Single Family Issuer for Ginnie Mae; an approved Fannie Mae MBS Issuer; approved by HUD; an FHA approved lending institution; approved for VA; and approved by USDA. If you are interested in joining the correspondent sales team or becoming an approved seller, please contact Tom Davis, FGMC's National Correspondent Sales Director.
"Are you a smaller lender or broker operating in the Mid-Atlantic or Southern region of the US and looking to sell? If so, a growing independent Mortgage Banker is aggressively looking to acquire companies like yours. There are several purchase options available depending upon your situation. Don't own your company but run a successful branch and looking or a better opportunity?" For a confidential discussion, please email me to arrange a time with the principals to talk.