Bank M&A; Vendor Updates; Are you Ready for Autumn/Winter Lending?


Harvard study tells us that 35% of American households (both homeowners
and renters) spend at least 30% of their pre-tax income on housing
costs. I remember back in college a friend of mine lived in a closet…ok,
it wasn’t actually a closet, but a room without windows is pretty close
to one. I guess times have changed, and maybe the logic of student
housing, according to Zillow’s College Towns: Buy v Rent? In the question of “rent versus buy”, it really comes down to the breakeven horizon; Zillow’s breakeven horizon figure is the
time it takes for the accumulating costs of renting a unit to exceed
the costs of having purchased the residence from the beginning. The
breakdown of university towns, and their corresponding numbers, incorporates
all costs associated with buying and renting, including upfront
payments, closing costs, anticipated monthly rent and mortgage payments,
insurance, taxes, utilities, opportunity cost of buying a home,
maintenance and renovation costs. It then factors in historic and
anticipated home value appreciation rates, rental prices and rental
appreciation rates.

There is a lot of rumors and chatter about MA going on out there. Yes, it seems there is talk of Mutual of Omaha cutting off locks next week, but plenty of lenders are talking to other lenders. On the banking side, in Minnesota Grand
Rapids State Bank ($225mm) will acquire Crow River State Bank ($84mm)
for an undisclosed sum. Over in Texas Investor group Park Cities
Financial Group will acquire Town North Bank ($593mm). Park Cities has
been looking for a TX bank to buy since last year and is led by
billionaire Darwin Deason. And Kansas-based Sunflower Financial, Inc.
and Colorado-based First Western Financial, Inc. jointly announced the
signing of a definitive agreement to merge.

everyone is growing. A Bank Director survey of directors and senior
bank executives of banks across the country finds 50% of banks with
assets $5B plan to reduce branches vs. 28% for banks $1B to $5B, 6%
for banks $500 million to $1B and 9% for banks that have less than $500

Everything being equal, anyone who thinks residential lending is going to skyrocket in the autumn and winter is foolish.
Are they hoping for rates to plummet, or a new HARP? (There, I said it,
and expect to receive a lot of flak for it.) For practically everyone,
loans per branch and LO are generally lower than where they were 6 or 12
months ago. If not – congratulations, you are in the minority. If the
U.S. economy continues to muddle along, and nothing too dramatic happens
overseas, rates will stay where they are or possibly creep up. LOs, who
had low volumes on tight margins when 30-year rates were at 3.50% last
year, and still in the business, may have a tough time when rates are at
4.50%. Hopefully (and hope is not a strategy) we’ll see some guarantee
fee price help, or other loan-level price help, from the agencies. And
although they don’t directly impact 30-year mortgage rates, overnight
Fed Funds tend to influence longer term rates – and psychology. The FOMC
is currently projecting the Federal funds rate will be between 1.25% to
1.50% in 2015 and 2.75% to 3.0% in 2016. There are companies seeing stable margins and volumes, but those are mostly the ones that have added branches and staff. But
even senior management at those companies has contingency plans for
what happens if the industry has another winter like the last one.

Lending to minorities is at a 14 year low,
probably for a variety of reasons. Certainly FHA lending has taken it
on the chin. Buyback risk and fear of future class action lawsuits are
candidates. Many minorities are all cash buyers, and certainly tighter
credit standards have impacted things. Industry observers suggest that
lenders should expect some sort of response from the Administration, and
fair lending enforcement is probably going to be stepped up.

“Do bigger loan files mean better loans?”
The MBA’s Mortgage Banking magazine noted, “(a) 85% of all loan files
contained 400-2,000 pages, (b) in 2010, only 3% of loan files had more
than 800 pages, whereas 16% do today, (c) when looking at the number of
loans with 500-900 pages, 52% of all conventional loans had them and 77%
of VA loans had them.” Mr. Joe Garrett, banking consultant and fervent
A’s fan, writes, “What’s really eye-catching is that the 10 biggest loan
files in the study contained more than 6,000 pages and the largest, for
a jumbo self-employed borrower, had over 8,000 pages. Rules and
regulations have led to fatter files, but the two obvious questions are
these: (1) Is the borrower more protected now from bad lenders and bad
loans, and (2) are these loans going to perform better?  Would anyone possibly answer yes to either question?”


Vendor Updates

It has now gotten simpler to collect digital bank statements almost instantly.  AccountChek and Encompass announced they are partnering to provide Encompass users an automated way to collect and verify account statements and VOD’s.  Kevin Conlon, COO at Mason McDuffie Mortgage Corporation, stated “We
are delighted to be using AccountChek, which provides a much needed
technology solution to a previously outdated process. The AccountChek
integration with Ellie Mae’s Encompass will allow us to ensure bank
account authenticity and increase originations by automating the
collection, verification and analysis of borrower accounts.”   Contact
George Manolis at

Compass Analytics, LLC
announced the release of its whole loan, MSR and agency best execution
pricing and pipeline risk web services. “To date, pipeline risk, whole
loan and MSR portfolio risk systems have worked off of batch processes
of entire pipelines or portfolios.  With this new release, Compass’s
analytics solution, CompassPointTM, will be available on a transactional
basis and be callable from most applications across the internet. 
Compass clients and their third party vendors will now be able to
integrate and access CompassPointTMs library of pricing and risk
functions such as MSR value, whole loan value, structured cash flow
value, agency best execution pricing, rate sheet pricing, investor
eligibility and fair market and gain/loss values, from within their own
applications on a loan-level, on-demand basis.”

Effective October 6, 2014, Arch Mortgage Insurance Company
(Arch MI) is updating the rates for our Non-Refundable Single Premium
Lender Paid Mortgage Insurance (LPMI) program, with the goal of
enhancing our risk-based pricing. The changes include a new credit score
tier for credit scores of 760+, and a further refined rate structure
below 680. The new rates reflect lower pricing for high-quality loans,
credit scores above 720, as well as some increases in the rates for
credit scores below 660.

MGIC published new underwriting guideline effective October 1st. The new Underwriting Guide posted at,
incorporates changes and updates for doing business with MGIC under its
new Master Policy and has been reorganized into 3 sections for easier

Portfolio Solutions S.A. (“Altisource” and NASDAQ: ASPS), a premier
marketplace and transaction solutions provider for the real estate and
mortgage industries, has launched Wholesale One,
a new cooperative for the wholesale mortgage industry provide a
platform for mortgage brokers, wholesale lenders and related vendors to
provide quality loans to consumers nationwide.

Arch MI is removing two overlays entirely from its EZ Decisioning program: credit score and property flipping effective October 2nd.

National Mortgage Insurance Corporation (National MI), a subsidiary of NMI Holdings, Inc.,
announced that it has launched a new credit union mobile application
(app) as well as a new website specifically for credit unions,
The mobile app enables users to run rate scenarios, view credit
union-specific bulletins, and easily contact National MI personnel.
National MI believes it is the first private mortgage insurer in the
industry to create a credit union-specific app.

a provider of third-party risk-management platforms for the mortgage
industry, announces that it is now providing appraiser due diligence and
screening services for eAMC, an appraisal management company based in
Troy, Michigan.  Comergence offers a full suite of hands-on and
automated services for screening and compliance monitoring.

Accurate Group
is being named to Inc. Magazine’s 500/5000 fastest growing private
companies in the United States list for the fourth year. Read the
complete press release for details.

it is darned early – I am in Atlanta for a couple days. Things are
pretty quiet out there anyway, and no one is complaining about rates. On
Tuesday there was some movement among coupons, and types of agency MBS
(Ginnie versus Fannie versus Freddie), but nothing major. It is a game
of supply and demand that help to set mortgage rates, and the supply
from originators remained rather mediocre as was echoed by the MBA’s
application numbers for the previous week. For demand by the Federal
Reserve, based on FedTrade operation results, purchases totaled $8.763
billion which equated to $1.75 billion per day.

the big news came from New Home Sales which surged 18% in August to a
504,000 annualized pace, the strongest since May 2008. The one-month
increase was the biggest since January 1992. And not helping those
renters in the market, the median sales price of a new house climbed 8%
from August 2013 to $275,600.

at 2:30AM HST we’ll have August’s Durable Goods (-17.9 expected) and
Initial Claims (+300k), and later the government will auction off $29
billion of 7-year notes. In
the early going the 10-yr T-note, which ended Wednesday at a yield of
2.57%, is sitting around 2.56% and agency MBS prices are little changed.


Jobs And Announcements

technology company who is actively involved in the mortgage lending
space is looking for Senior Mortgage Underwriters to work part-time from
The ideal candidates for this position will have expert knowledge of
Agency and/or Government and USDA underwriting guidelines, strong
written and verbal communication skills as well as excellent computer
skills (mainly with Microsoft Word, Excel Internet Explorer).
“Excellent compensation based on the volume and accuracy of the work
produced.” Interested candidates should inquire/apply to The software specializes in researching agency rules and investor overlays: The Rule Tool by Take Three Technologies.

Congratulations are due as PRMG opened four new retail branch operations in the Pacific Northwest and Southeast regions. PRMG
was “recently ranked No.2 of the 50 best companies to work for and
continues to show signs of organic growth. PRMG’s national advertising
campaign is aggressive, conveying company strength, size and stability
and is geared toward expanding their national footprint in retail,
wholesale and correspondent lending. PRMG is an approved Seller/Servicer
with Fannie Mae and an approved Ginnie Mae Issuer.” For more
information on the company’s plans and employment, contact Paul Lucido.

And congrats to Aaron Nemec, who Guild Mortgage Co.
has promoted to executive vice president and named him national retail
manager, a new position created to support Guild’s growth plans. “Nemec
will lead the company’s retail production, currently with more than 200
branch offices and satellites in 23 states. Previously, Nemec managed
retail loan production for Guild’s Desert and Mountain region, its
largest, with more than 60 locations in 11 states. The region accounted
for some 40 percent of all Guild loan volume in 2013.”

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