CFPB on Construction Loans; Training and Events; FHLB mREIT News

News

Dodd-Frank
rules require public companies to provide their shareholders with an
advisory vote (non-binding) on the compensation of the most highly
compensated executives at least once every 3 years. The so-called “say
on pay” votes have added more work to banks and their compensation
committees, yet less than 2% of companies fail to get shareholder
approval according to executive recruitment firm Korn Ferry. And
speaking of company types, credit unions are now up to serving over 105 million Americans. The auto loan balance figure of $100 billion is of interest, as well as credit union’s mortgage volume being 39% higher than the same period in 2014.

Under the “big news” category, the FHFA (which also oversees Fannie Mae and Freddie Mac) is closing a loophole in membership,
and the industry is curious to see how it will impact companies like
Redwood Trust since for some levering whole loans with advances is the
only asset strategy that produces a return above their cost of capital.

Michael Widner with KBW wrote, “The FHFA announced that it would be kicking captive insurers, and thus mortgage REITs, out of the FHLB.
mREITs that joined prior to September 2014 will have a five-year sunset
period starting from the publish date (roughly mid-February), while
those joining more recently will have a one-year sunset. We view this as
a negative for the mortgage REIT sector (and mortgage credit
availability more broadly), but really only on the margin…we view the
loss of this source of funding negatively.

“Overall
we saw FHLB membership as providing benefit to mREITs through funding
diversity more than through lowered costs. There are exceptions to this,
primarily for non-agency funding of jumbo whole loan conduits and
floating rate commercial mortgage financing. We believe broker/dealer
alternative financing vehicles will be more expensive for those
products, but also note that all mREITs currently making use of that
financing will fall under the five-year sunset provision.

“We saw FHLB advances largely as option value
for the long-awaited possibility of accelerating the ‘return of private
capital
‘ back to the mortgage markets. Since the financial crisis
Fannie, Freddie, and FHA loans have dominated the market. The only
meaningful non-government originations have been jumbos, primarily of
pristine credit quality. The hope for a return of non-agency
securitizations appears to rest outside of banks and broker/dealers (due
to regulatory pressures and CFPB rules), and in our view in the
wheelhouse of mortgage REITs. FHLB financing could potentially have
played a role in opening that up (as it has with jumbo securitizations).
There didn’t appear to be anything imminent on that front (and
certainly nothing in our projections), but it could only have helped if
things were to start moving.”

Speaking of members of the Federal Home Loan Bank system (in this case Cincinnati), California’s Parkside Mortgage Trust
was admitted as a member of the Federal Home Loan Bank of Cincinnati
through its insurance subsidiary PSL Insurance Company LLC. Lenders
recall that in the last quarter of 2015 Parkside Mortgage Trust, Inc.,
organized to operate as a Real Estate Investment Trust (REIT), announced
it has commenced operations with the purchase of its first mortgage
loan. The non-agency loan will be serviced by its affiliate, Parkside
Lending, LLC. “This effort has been in the works for the past three
years and we’re proud that it has finally come to fruition,” said
Matthew Ostrander, President and Chairman of the Board of Parkside
Mortgage Trust.

And
Bloomberg’s Matt Scully sent along a write up by Felice Maranz
reiterating that FHFA’s rule on FHLB membership hurts mortgage REITs and
others that used captive reinsurers to access FHLBs for funding. It is
also a negative for housing as mREITs would use the FHLB funding to buy
mortgage-related assets, keeping markets liquid, and pressuring
financing costs. On the other hand, the announcement is neutral for
banks as the agency dropped a proposal that would have required banks to
requalify annually for FHLB membership

In other late-breaking news, the CFPB has “created a fact sheet that reviews the basics of construction loan disclosures under the Know Before You Owe mortgage disclosure rule.

For those that care about their money, China’s economic slowdown is having repercussions all
over the global economy. The US is probably the most insulated, but it
is wreaking havoc in South America and Asia – and at some point that
spreads…

Although
we’re giving some of it back this morning, the U.S. Treasury market
rallied sharply Tuesday with 5-year, 10-year, and 30-year securities all
touching multi-month highs. The gains were led by falling oil prices
and a stock market that is still trying to find a bottom, although
technical factors were at play as well in a market that has seen a
tightening range since mid-2015. The $24 billion 3-year note Treasury
auction drew a lower-than-average bid-to-cover ratio but the highest
indirect bid in years

It
is a new day, of course, and we’ve already seen the MBA Mortgage
Application Index for the week ending 1/9 (apps were up 21% with refis
up 24%, so we can see what drove that number). Later today we’ll have
the Fed’s Beige Book for January and a $21 billion 10-year note Treasury
auction. For numbers we had a 2.10% close on the 10-year yesterday and this morning we’re at 2.13% with agency MBS prices worse about .125.

Jobs and Announcements

In retail job news, along the Atlantic Ocean TD Bank, “America’s Most Convenient Bank,” will be hiring 79 experienced Mortgage Loan Officers (MLOs) from Maine to Florida.
MLOs will originate residential mortgage loan applications, guide
customers through the home buying process and explain the variety of
mortgage products and services that meet their unique financial needs.
The bank will also hire Managing Producers
to strengthen the bank’s mortgage business. The Managing Producers will
maintain responsibility for recruiting new MLOs, managing the loan
production of an MLO team, coordinating sales, driving business
development and growing the business. Experienced MLOs and Managing
Producers who are interested in working for TD Bank can visit www.tdbank.com/careers/ (use Req. ID 109880BR) for more information on open positions.

In wholesale news EMM Wholesale
is expanding its footprint in the Northeast New England region
and is hiring AEs in that region in addition to producing area sales
managers, wholesale operations, underwriting, and processing personnel.
EMM Wholesale is a division of E Mortgage Management, LLC, a privately
held mortgage lender founded in 2003. “We are licensed in over 30 states
and are an A+ rated, accredited member of the Better Business Bureau,
member of the Mortgage Bankers Association and believe in maintaining
the highest of compliance standards with the CFPB. E Mortgage Management
is characterized by an energetic, creative staff paired with an
in-house marketing agency and cutting edge technology and our
underwriting and processing systems allow us to approve and process
mortgages quickly without jeopardizing quality. We have cultivated a fun
team environment where there is opportunity to learn, develop and
advance your career while contributing to the company.”  For
confidential consideration e-mail your resume to John Miriello, Vice President, Human Resources.

And farther inland, MB Financial Bank
is currently seeking qualified Account Executives in the following
areas: Dallas, Texas; San Antonio/Austin, Texas, Minnesota, Wisconsin,
and Florida. “At MB,
Account Executives fund significantly more loans and make more income
per month on average compared to peers. AEs, who believe they are
funding fewer loans per month than they are capable of funding, and are
looking to grow their business, should contact Buddy Dantin, SVP Regional Sales Manager (504.453.4961) for opportunities in TX, MN, and WI, and Tim Bell, SVP Regional Sales Manager (404.316.0459)
for Florida. MB Financial Inc. is the Chicago-based holding company for
MB Financial Bank, N.A., which has approximately $15 billion in assets
and a more than one hundred year history of building deep and lasting
relationships with middle-market companies and individuals. Equal
Housing Lender and Member FDIC. NMLS#401467

And in product and investor news…

Roadrunner Solutions is offering “a free service to help you connect your pre-approved borrowers with local Real Estate professionals
that will reinforce your relationship with the borrower. “Roadrunner
has a large network of Realtors that will respect the relationship
between the LO and their borrower. This service will improve your
closure rate and help deliver the high level of customer service
required for the purchase money borrower. If you are a Call Center LO,
run a Call Center Platform, originate loans outside of your local area,
or just struggle to find quality Realtors, Roadrunner is a great service
for you to try with no fees or any cost to the borrower.  Roadrunner
has also added website design and support to their product offering. If
you would like to find out more e-mail us.”

And “Right House Capital has been preparing for months to help our valuable clients with their TRID issues. As
a buyer and a broker for scratch and dent loans, RHC sends the trade in
the direction most beneficial to our clients regarding price. Right House
already has yielded several TRID violations at a price between 94.00%
and 98.00% of the trade’s unpaid principal balance. RHC can either buy
or place ALL loans with a TRID issue, regardless of its severity.”  For
more information, please contact Craig Beard.

In QC news, according to STRATMOR’s preliminary findings, “more than 85% of independent mortgage bankers outsource some portion of their Quality Control (QC) function.
While outsourcing doesn’t appear to affect the level of defects
present, do you know how your Material Defect Rate in Quality Control
compares to peers? STRATMOR Group has reopened its survey on key metrics for the QC department.
This survey is targeted at QC department managers at independent
lenders who originated at least $500 million in volume from any channel
in 2015. This short survey is free and covers pre-funding and
post-funding sampling rates, post-funding Material Defect Rate
experienced in the past three months in total and by origination channel
and historical post-funding Material Defect rates. Aggregated results
will be shared with all participants at no charge.  To learn more about the survey, preview the question and take the survey click here or contact Nicole Yung.

And the interesting upcoming events continue to come our way for residential lenders!

Join National Mortgage Professional Magazine and Lender ProLink for their free webinar “Top Millennial Mobile Strategies for Growth Focused Originators in 2016!
this Thursday, January 14, at 2PM EST. This webinar will teach you how
to attract top producing real estate agents and build trust, respect and
authority with them; how to drive new leads; and how to engage
millennials with easy to use technology. By registering, you will
automatically be entered to win a brand new iPad Mini 4 they will be
giving away LIVE! Click here to register.

If you are looking to start 2016 off with information on the economic outlook for the mortgage industry, then join Sierra Pacific Mortgage’s Market Power Webinar as they host Michael Fratantoni, the MBA’s Chief Economist. The 2016 Economic Outlook webinar
will cover economic growth, the job market, mortgage rates, trends in
mortgage lending and the drivers of housing market growth.  This webinar
is open to all and
will take place on Thursday, January 14th at 11AM PST (2PM EST).
Take advantage of what is sure to be an excellent webinar from one of
the industry’s leading voices. To register, please click this link.

On
Tuesday, January 19 and Wednesday, January 20, AmeriHome is offering a
TRID Webinar to share TRID finding trends and provide best practices for
avoiding TRID-related loan purchase delays. Click the link for registration information.

The California Association of Mortgage Professionals will hold its annual Sales and Marketing Convention January 21-22
in Orange County, California. Help CAMP look to the future by joining
this two-day convention. Inspiring speakers, leaders of the industry,
and vendors from all across the nation are just the tip of the iceberg.

The MBA spread the word that the FFIEC is offering, on January 26tha one-day cybersecurity workshop in Washington DC. There is a reception the prior evening that is free to attendees.

Will you achieve your targeted sales goal? Plaza Home Mortgage is conducting a free webinar on January 20th.
The focal point is selling skills for Loan Officers by learning ways to
use the S.M.A.R.T. process to increase individual goal setting skills.

Mark your calendars, March 15th in New York City, for the BofAML (Bank of America Merrill Lynch) Residential Mortgage Housing Finance Conference. The
primary goal of the conference is to provide participants with a clear
roadmap for the future and an understanding of how best to strategically
position for the opportunities that are emerging in a rapidly evolving
environment.

It isn’t too soon to plan ahead for the April 7th and 8th American Conference Institute 25th National Conference on Consumer Finance Litigation and Class Action in Los Angeles.

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