Good Studies on Professions vs Home Ownership; LTV vs Default Rates; Increasing Student Debt


tellers and other bank employees are very aware of elder abuse, and
train regularly to spot it. (Hopefully I won’t be accused of it – my
nearly 92 year old Dad really does prefer Costco hotdogs!) Seriously,
Sen. Susan Collins, R-Maine, is saying that a
safe harbor should be written into federal privacy laws to protect
advisers from legal liability if they report suspected financial abuse
of the elderly. It
is no coincidence that she is the chairwoman of the Senate Special
Committee on Aging. “If they report in good faith, it seems to me they
need some sort of protection, or many of them are not going to be
willing to report,” she said.

Freddie Mac
produced a column from one of its economists that compared Census
data showing homeownership rates by profession with BLS statistics
projecting which profession will see the most growth.  The fastest growing jobs, by and large, have subpar homeownership rates.

And a recent article published by Urban Institute draws from Freddie Mac’s newest data that identifies two indicators of credit risk: probability of default and loss severity given default.
Freddie’s new analysis calculates loan severity by various credit event
types and breaks down loss severity into numerous categories. According
to Freddie’s analysis, of the loans originated between 1999 and 2004,
2.3% experienced a credit event whereas in 2007, 12.6% of originated
loans experienced a credit event. In 1999 to 2013, 22% of loans that
experienced a credit event have been rehabilitated, with 11% of these
loans having been modified and are now current. The remaining 78% of
these loans are likely to experience a loss, and of these loans 54% have
already been liquidated or have been foreclosed.

liquidated from 1999 to 2004 experienced a loss of 23.2 cents for every
dollar remaining at default, compared to a loss of 36-40 cents for
every dollar remaining at default for loans liquidated between 2005 to
2008. Loans with higher LTVs have a greater chance of liquidating, with
63% of loans with an LTV of 60 or under are expected to liquidate
compared to 81% of loans with LTVs over 80. Ironically,
loss severity for loans with LTVs over 80 is much lower than for loans
with LTVs between 60 and 80; because loans with LTVs over 80 require MI.
Loans also originated between 1999 and 2004 experienced greater home
price appreciation and loans with LTVs below 60 had more equity leading
to lower loss severities among these loans. The smallest loan amounts also had the highest severity.
For example, from 1999 to 2004, loans with a balance of $60,000 or less
had a loss severity of 47%, compared to 31.3% for loans with a balance
of $60,000-100,000 and an 18% severity for loans greater than $100,000.

A New York Fed report
tells us that mortgage balances, the largest component of household
debt, increased by 0.5%. Mortgage balances shown on consumer credit
reports stand at $8.17 trillion, up by $39 billion from their level in
the third quarter. Balances on home equity lines of credit (HELOC)
dropped by $2 billion (0.4%) in the third quarter and now stand at $510
billion. Non-housing debt balances increased by 2.6%. What caught the
media’s attention, however, were the delinquency rates (loans that are
90 days or more past due). Overall they were unchanged at 4.3%.
Delinquent mortgage and credit card debt fell, but auto loan
delinquencies rose to 3.5% from 3.1%. The biggest trouble spot remained
student loans, which saw delinquencies reach an alarming 11.3%, up from
11.1% in the third quarter. By contrast, only 3.1% of mortgage loans
were delinquent, though that level is far higher than before the Great
Recession, when mortgage delinquencies were consistently around 1% to

again the topic of Millennials and their debt is in the news. Student
loans are not dischargeable in bankruptcy, and as a result linger on
borrowers’ credit reports longer, creating increasing pools of
delinquent debt. But the New York Fed said the survey also reflected
“high inflows” of new delinquency. Student debt totals rose $31 billion
in the quarter to nearly $1.2 trillion.

Sure enough, Millennials have the lowest net worth of all generations,
significantly lagging behind all other age cohorts, with a median net
worth of $10,400 compared to the second lowest median net worth of
$46,700 for 35-44 years old. Those aged between 65-74 years old had the
largest median net worth of $232,100. With low employment opportunities
and little room for advancements in income, Millennials’ net worth is
near historic lows and has not recovered since the recession. Likewise,
assets have also decreased at a faster rate, resulting in the overall
decline in net worth. Since 2010, the median amount of debt among
Millennials has reduced to $31,100 and the number of Millennials with
mortgage related debt has also declined, which has been evident during
the housing bust. This may be due to limited access to credit and other
debt obligations taking the place of mortgage debt. Installment debt is
highest among Millennials, partly due to student loans. The median value
of student debt for Millennials is $17,200, with the amount of young
adults with this type of debt increasing to 41.7%. Car loans are also
included in installment debt, as 35.3% of Millennials have monthly car
payments, whereas the prevalence of credit card debt has fallen among
Millennials. Overall, Millennials’ liabilities have declined since the recession, but so has their net worth.

again our bond (and stock) markets are being determined by what happens
overseas. Remember that the U.S. economy is doing pretty well, and
would suggest higher rates are on the way. But yesterday’s bond selloff
was attributed to market speculation that Greece may request a 6-month
extension to its current loan agreement which could ease tensions a bit
in the short term. The Empire Manufacturing Index fell in February and
came in slightly light – probably due to weather. But the NAHB Housing
Market Index fell to 55 in February from 57 in January – mostly due to a
fall in the Midwest. By the time the dust settled Tuesday the 10-yr
T-note was worse over .75 in price, closing at 2.14%, and Agency MBS
prices worsened over .5

morning we’ve had the MBA’s application numbers (a drop of over 13%
with refis down 16% and purchases down 7%). We’ve also had Housing
Starts and Building Permits (-2% and -.7% respectively) along with the
Producer Price Index – PPI – (-.8%), and will also see the Industrial
Production and Capacity Utilization twins. Later is the U.S. Fed
releasing the Minutes from Jan. 27-28 FOMC Meeting. After the early news the yield on the 10-yr, which closed Tuesday at 2.14%, is down to 2.12% and agency MBS prices are better about .125.

Training and Events

Out in Northern California NorthBay CAMP
is conducting a Marketing seminar focusing on:  Search Engine
Optimization, Social Media, working with Millennials, and more! It will
be on Thursday, February 19th from 9am to 2:30pm in Santa Rosa. Lunch
will be provided, and David Luna is the featured speaker; please click here to register.

“Concerned about Continuing Education NMLS CE Requirements? Knock it out in ALLREGS Q1 and check it off your list. AllRegs offers all of the individual state continuing education courses
you need to stay licensed and compliant. Credit banking fees are
included with your registration. Registration for one of its 7 or 8-hour
Federal SAFE Act CE courses are also available: 7 Hour SAFE Core, 8 Hour SAFE comprehensive. To choose the course that’s right for you, check out your state’s Successive Years Rule. Click here to see all state-specific CE courses.”

Banc of California’s Renovation and Construction Department will be hosting a FREE webinar, February 19, 2015 @ 11am PST, on how to market, process and close Renovation Loans. “Don’t
miss out on this opportunity to learn how to drive more refinance and
purchase loans to your platform. Learn renovation facts and marketing
techniques to support your immediate sales efforts. Learn how to
increase and promote loyalty amongst your referral partners, Apply your
Renovation knowledge to your business marketing plan. This webinar is
Ideal for both Production and Operation staff. To register, click the link.”

Colorado Mortgage Lenders Association’s Part Two of TRID Education Series “Navigating the Potholes and Pitfalls” is scheduled for February 18th. To register for this educational event, click here.

“Should you proceed with marketing service agreements?” Colorado
Mortgage Lenders Association’s (CMLA) is hosting a luncheon on March 5,
2015 to provide you with information to make an informed decision. To
register, click here

In addition to the rules you’re already navigating – this year brings even more, including theTILA
RESPA Integrated Disclosure (TRID) overhaul, and the HMDA rule changes.
These pile on even more complexities to an already challenging period
of change in regulatory, supervisory, enforcement and litigation
matters. Change doesn’t have to be difficult when you take the steps to prepare at MBA’s Legal Issues and Regulatory Compliance Conference May 3-6 2015, the
industry’s premier conference addressing legal and regulatory
challenges. To get the latest from government and industry experts, register here.

The MBA‘s National Technology in Mortgage Banking Conference Expo 2015, March 29-April 1st
includes leading mortgage technology personnel connecting with vendors,
industry experts and peers to address recently implemented regulations
affecting the way your business operates, and discover emerging
technologies to develop the solutions you need to thrive in today’s
ever-changing real estate finance industry. Register today for access to
over 20 educational sessions and industry leaders offering proven
business practices.

The American Bankers Association is holding its annual Real Estate Lending Conference
on April 8-10 in Baltimore, MD. There are dual tracks for CRE and
residential lending, with multiple sessions addressing business
challenges and building market share and profitability.


Jobs and Announcements

Coast Capital Group
, a national private lender based in Boston, MA, is
looking to hire a mortgage professional to run its expanding loan
origination platform.
Since inception in 2013, Grand Coast has doubled in size every year,
and is now looking for a talented individual to serve as the VP of Loan
Origination Products, who will manage and grow its current loan
product, as well as expand into other loan products to meet the constant
demand of Grand Coast’s clients. Grand Coast
was founded by very successful entrepreneurs and real estate investors
who continue to increase their private lending and mortgage footprint,
and looking for the right team member to lead the charge.  Are you up
for the challenge?  If so, please contact Jeff Carter.

In the New Jersey area, Oak Mortgage Company
has grown to become one of the Top Residential lenders in the Delaware
Valley. Oak was recently recognized by National Mortgage Professional
Magazine as one of the Top Mortgage Employers in the Northeast. We are
proud and honored to receive such recognition by one of the Top Mortgage
trade magazines. “Oak prides itself in offering an environment for our
employees to learn and grow with the company. We strive to provide a
collaborative, creative environment where each person feels encouraged
to contribute to our processes, decisions, planning and culture. Oak
is always looking to grow our Retail presence by adding experienced
Loan Officers and Branch Managers. In addition we are currently seeking
to fill the following Operations Positions in our Marlton, New Jersey
headquarters: 1) Sr. Mortgage Processor/Underwriter, 2) Opener /
Processing Assistant, and 3)  Post-Closing Delivery Clerk.” For detailed job descriptions and/or a confidential interview please contact Gino Brown, Sr. Vice President.

Join a team of well-established and trusted mortgage experts as CMG Financial’s Retail Regional Sales Manager in the Great Lakes Region.
“We are looking for a professional experienced in growing a presence in
the industry as well as developing a valuable team through strong
leadership. CMG is also looking to expand its team of talented and
knowledgeable professionals with the following job openings: Wholesale
Operations Manager in Rockville, MD, Correspondent Underwriting Manager
in San Ramon, CA, and Wholesale Underwriting Manager in San Ramon, CA. Interested in joining a company whose steady growth has elevated it to success? Contact Amy Gallow to learn more about working with CMG.”

the training front, “The deadline for integrated disclosure
implementation will be here before you know it. Are you ready for one of
the most significant regulatory changes since RESPA 40 years ago? REMN Wholesale is launching a free monthly webinar series on integrated disclosure that kicks off on tomorrow.
(In addition to the webinar and as a part of REMN’s ongoing commitment
to the broker experience, they’re offering new incentives on all FHA
streamlines – $0 commitment / underwriting fee and .5 percent incentive
with 660+ FICO – and staffing up with account executives in regions across the country.
Know any account executives dedicated to customer service and looking
to join a thriving lender? Have them send their resumes to aerecruiting@remn. com.)

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