Demographics and politics make interesting bedfellows. There are eight senators who are at least 80-years-old, nearly twice as many as ever before. Toward the other end of the age curve, there are an estimated 83.1 million millennials in the country, born between 1982 and 2000, the largest age group, representing more than a quarter of the U.S. population. Residential lending is certainly starting to see some new faces in its ranks, which is nice to see.



The holidays provide a perfect time for lending teams and leaders to disconnect and think critically about their business and how they can improve for 2018. The mortgage industry will have another strong year ahead, but the dynamics have shifted. Taking the time to lean into those shifts will set you up for success that less reflective competitors will fail to capitalize. A new paper, "5 Things to Do for 2018" is a great read during the break that helps you prepare for a new year and how start 2018 strong. Exclusive to Rob Chrisman subscribers today, it's a must read for all mortgage leaders and their teams. Download your Free Copy Here.

GSF Mortgage Corp. has recently launched its Single Close Construction Program for FHA, VA, and USDA construction lending. Since its launch, GSF has approved more than 60 builders to offer their products. This low down payment construction option is a great alternative in markets that are strapped for inventory. GSF Mortgage is one of the few lenders in the country offering new construction lending for the 100% LTV USDA product. If you are a branch manager, loan originator or processor with construction lending experience or would like to offer construction lending products please, reach out to Rich Obermeier at (262) 957-8901.

Mergers and Acquisitions

In Maryland, Virginia Partners Bank, headquartered in Fredericksburg, agreed to acquire a 51 percent stake in Newport News-based Johnson Mortgage Company, LLC, with the transaction effective January 1. Johnson Mortgage will continue its residential mortgage services in Newport News and Williamsburg. Virginia Partners will redirect its secondary market loan production through Johnson Mortgage. The bank will then focus its mortgage production activities around its portfolio loan program under the leadership of senior vice president Robin Huddle.

Amalgamated Bank ($4.1B, NY) will acquire New Resource Bank ($353mm, CA) for approximately $58.5mm in stock (100%). At the other end of the spectrum, for only the 8th time this year regulators closed Washington Federal Bank for Savings ($166mm, IL) and sold it to Royal Savings Bank (IL) under a purchase and assumption agreement. Royal assumes the insured deposits for a 1.26% premium and will purchase about $23.7mm of assets (14%).  Heartland Financial USA ($10B, IA) will acquire FirstBank & Trust ($930mm, TX) for about $185.6mm in cash (10%) and stock (90%) or about 2.22x tangible book. In Tennessee SmartBank ($1.1B) will acquire Southern Community Bank ($244mm) for about $31.8mm in stock (100%) or about 1.49x tangible book. In South Carolina South Atlantic Bank ($525mm) will acquire Atlantic Community Bank ($92mm) for about $18.1mm in stock (100%).

Upcoming Events and Webinars

Register for a variety of skill building training programs thru MGIC webinars. January webinars are now available to view.

The early registration savings deadline for the 15th Annual Eastern Secondary Market Conference, February 14-16, has been extended until January 1st, 2018. The fees will go up on January 2nd, so register by this date and save $150 off the regular attendee fee.

With conservative estimates of lending being down 5% next year, now is the time to look for new products to help grow your business in 2018, such as the FHA-insured, HUD-backed Home Equity Conversion Mortgage (HECM). Jim Cameron, Senior Partner of STRATMOR Group, will lead a session at the ReverseVision User Conference in San Diego February 6-7 that focuses on power of data-driven decision making; and why now is the time to consider HECM's in your lending product mix. Attend the FREE session on Tuesday, February 6 to learn more about Generational Lending, a business strategy designed to help you keep your customers for life. You can register for the entire User Conference that features Jim Cameron's session and many other HECM-focused sessions geared toward growing your business in the new year. Click here to request your free ticket and be sure to visit ReverseVision's website for more information.

We have the 27th Annual Rocky Mountain Mortgage Lenders Expo on April 12th. There's an early bird special of 10% off exhibit booths and sponsorships. Hurry, deal ends Friday, January 5th, 2018.

Are Your Borrowers Satisfied?

Is there a big impact in small-but-steady borrower satisfaction gains? Yes, says STRATMOR's MortgageSAT Director Mike Seminari. Seminari reports that a 16-year study based on data from the American Consumer Satisfaction Index (ACSI) shows small-but-steady improvements in customer satisfaction do in fact add up over time. In the study, companies showing year-over-year satisfaction gains grew at fourteen times the rate of the market. Seminari also reports that in the past year, 90 percent of the lenders who use the MortgageSAT product show a gain in their Net Promoter Score (NPS), including one client who gained 15 points. In a side-by-side comparison, MortgageSAT lenders saw a 31 percent higher growth rate, 22 percent higher productivity and $800 higher profitability per loan versus their non-MortgageSAT peers. For more of the details, see this month's MortgageSAT Tip.

Capital Markets

I sleep in a bed, usually, and use the bathroom, more frequently as the years go by, but that doesn't mean I need accessories all the time. Remember that the Bed Bath and Beyond CEO said over the summer that he was debating closing 80 to 100 stores after in-store sales dipped nationally. This commentary focuses on residential real estate, but it is good for lenders to keep an eye on the commercial sector (strip malls, stores, big malls, that kind of thing). Wells Fargo's economists foresee favorable conditions in commercial real estate heading into 2018. Notably, apartments continue to be a standout as people continue to move back to city centers. As new completions come online, vacancy rates have risen slightly, effective rents have decelerated, and new construction appears to be moderating in line with demand.

The new apartment development has been mostly concentrated in high-end units near employment and transit centers which has resulted in increasing rents each quarter since the Great Recession. Another strong growth area, according to the report, is for warehouse and industrial space fueled by e-commerce, international trade, and a re-emergence of U.S. manufacturing.  In certain geographies, older industrial space is being reimagined as restaurants, breweries, and other entertainment venues.

Do you feel richer? The Federal Reserve's third quarter flow of funds report showed the net worth of households and nonprofits rose to $96.9 trillion. This is an 8 percent increase from the same time last year. Continued increases in asset prices such as equities and real estate have helped to improve household balance sheets. Likewise, subdued overall inflation has limited consumer price pressures while financial assets have added value to households. Liabilities as a percentage of household assets continued to show a steady decline. An area of concern in the report is a declining savings rate (3.3%) and weak income growth (+0.4%). For those households who do not own real estate, equities, or other appreciating assets, lack of personal income growth remains troublesome. 

Fannie Mae announced its 2018 Connecticut Avenue SecuritiesTM (CAS) Issuance Calendar as part of an ongoing effort to ensure transparency in the market and help investors with their investment planning for the year. Fannie Mae has the option to issue, or to forego issuance of, one or more CAS deals during each issuance window. "The publication of our 2018 issuance calendar is consistent with our approach to provide investors with transparency around our benchmark CAS program," said Laurel Davis, Vice President for Credit Risk Transfer, Fannie Mae. "In 2018, we plan to bring six to seven deals to market for a total of approximately $6 to $8 billion in CAS notes over the year, dependent on market conditions."

The two-year Treasury yield reached its highest level in more than nine years on Monday, prompted by expectations the Federal Reserve would raise interest rates further and short-term government borrowing would grow from possible federal tax cuts. As the commentary mentioned last week, the increase in supply of Treasuries and potential lack of demand has caused rates to rise as supply outstrips demand. Sounds like the tax bill is going to create the need for more government borrowing. 

For a few months we've been talking about the yield curve flattening. Well, now it is steepening - probably a healthier thing. U.S. Treasuries and agency MBS prices were mixed Monday, and the yield curve steepening due to weakness in the 30-year Treasury bond ("long bond"). The 10-year note finished the session yielding 2.39%. MBS prices decreased/worsened on the day amid light volumes - just like every week leading up to Christmas, right? Monday's only economic release, the homebuilder sentiment index, rose 5 points to "74." I don't know what the number means, but this is the highest reading for this index since 1999.

On the economic calendar today, the Q3 Current Account Balance (narrowing), housing starts (+3.3%, stronger than expected) and permits (-1.4%), and Redbook Same-Store Sales. Additionally, the House is scheduled to vote Tuesday on the tax bill after a floor debate in the morning. We start with the 10-year yielding 2.42% and agency MBS prices worse a solid .125 in price, so rates are higher versus Monday evening.

Jobs and Promotions

First Landmark Bank, a community bank based in Atlanta, Georgia, is growing and looking to expand its retail channel throughout the Southeast. Management is seeking experienced Sales Managers and LOs with a proven track record of sales for several locations in Georgia, (Atlanta, Augusta, Savannah), SC, NC, TN, and FL. "First Landmark Bank has created a pro-sales culture with an operational workflow that supports and enables you to close loans more efficiently. Offering customized marketing and a full suite of lending products, including Portfolio, Construction lending, and Federal Home Loan Bank products, helping you capture more business from your referral partners. So, if you're tired of the "BBB" (a/k/a Big Bank Bureaucracy), missed closings, feeling like you're just another body to fill a quota, and wish to further your career in mortgage lending, then it's time to learn more about the advantage of the Community Bank Experience." Contact Mickey Schilling, SVP Mortgage Division Manager (404-969-4428) for more information.

John G. Stevens recently accepted a role as Vice President of National Business Development at PRMG with "the responsibility of not only raising the bar for Mortgage Professionals Nationwide but being instrumental in making PRMG THE BAR. In his new role as VP of National Business Development, John will use leadership, community outreach, and good old-fashioned grit to make PRMG and this industry, the best place for Loan Officers to work in the United States. John will be reporting directly to SVP, Director of National Retail Production, Chris Sorensen. If you're ready to join a top-tier team and company, then it's time to talk! Contact John G. Stevens (801.427.7111)."

Wells Fargo has appointed Mary Mack to head the company's Consumer Lending business, in addition to Community Banking, expanding the senior executive vice president's responsibilities.

In HECM employment news, ReverseVision has a new Chief Technology Officer (CTO), Jim Magner, and VP of Operations, Stacey Lund. As CTO of ReverseVision, Mr. Magner will guide the firm's product development, platform operations and internal IT teams. Stacey Lund will oversee ReverseVision's training, professional services, education and document operations departments.