April 25: FICO & strategic defaults; older jumbo pools downgraded; Call Report Q&A; production & Ops jobs are out there
In terms of powerful world figures, how does the FDIC's Sheila Bair stack up against Lady Gaga or Katie Couric? ForbesList
For the 1st quarter, the big four banks originated a combined $186 billion in residential mortgages, down 33% from the $281 billion home loans written in the previous quarter, according to their financial statements. Servicing costs were up, each bank still has hundreds of millions of dollars in reserves for buybacks on defaulted loans, and thousands of full-time and part-time jobs were eliminated. Wells Fargo did $84 billion (down from $128 billion in the 4th quarter), BofA did $52 billion (down from $81 billion), JPMorgan Chase totaled $36 billion (down from $51 billion), and Citi did $14 billion (down from $22 billion in the fourth quarter). However, compared to the 1st quarter of 2010, Wells, Chase, and Citi were all up, with only BofA dropping (from $67 billion last year).
But good loan officers continue to be in high demand. For example, Advantage Mortgage, a Mortgage Banker/Broker licensed in 16 states, is looking for retail LO's in CA, CO, CT, FL, GA, HI, ID, MA, MD, NM, NV, OR, PA, TX, UT, and WA. Advantage is headquartered in Irvine, CA, but also has branches in Hawaii, Nevada, and Texas, and is looking for a Qualified Employee (Manager) in each of its Nevada and Texas branches, along with an Operations Manager and processors in Irvine. The company has been around since 2003, is a Direct lender for Conventional and VA loans, approved with all lenders for FHA, Jumbo, Homepath, USDA, Commercial and portfolio products. If anyone out there is looking, or if you know someone who is, check them out at Advantage and click on Careers or email a resume to resume@advmortgage.net.
In Illinois, Home State Mortgage Group is searching for retail LO's in the NW Suburban Chicago area, along with a recruiter/HR person in its headquarters. The lender is part of Home State Bank (Illinois), and together they've been around over 90 years. For more information visit their website at HomeState and click on "Mortgage Center", and if you're looking for a new opportunity, or know someone that is, contact Jim Sorenson at jsorenson@homestateonline.com.
And in Colorado, Peoples Mortgage, owned by Peoples National Bank, is looking for loan officers in Colorado, although the company, being a bank with a Federal Charter, has no licensing required at the bank's LO level, and can lend in all 50 states. (A Federal chart exempts LO's from state licensing, but not, in the soon future, NMLS.) If you're interested in People's e-mail Jeff Garman at Jgarman@epeoples.com or call 1-866-573-9662 for inquires.
The flow of regional bank earnings continued through the end of last week, with PNC's net income coming in more than expected at $3.63mm, up 15% from the same period last year. NIM (net interest margin) was stable on flat loan growth and most of the improvement came from lower non-performing assets. No loan growth was reported. BB&T reported a 21% increase in earnings to $234mm, or slightly higher than expected. NIM and loan growth were largely unchanged from the quarter before and most of the earnings came from a 40% drop in provisions. Cap One posted profit that was 60% higher at $1B on better credit card recoveries and lower charge offs. 5th 3rd said net income rose to $265mm from a $10mm loss from a year earlier and SunTrust posted a $38mm gain compared to a loss of $229mm a year earlier. Both 5th 3rd and SunTrust had improvement due to better credit quality.
In the past, the setting of jumbo loan rates was much more dependent on where the jumbo residential mortgage-backed securities traded. Now, prices are primarily set based on a spread to the investor's cost of funds. Still, it is important to see what is happening with the price of existing jumbo securities, and it is not good news: JumboGrading and MoodysJumbo.
The California Mortgage Bankers Association continues to host its Mortgage Quality and Compliance Committee presentations. Inside or outside of California the presentation is free, with the next webinar being this Thursday the 28th at 11AM PST. It will cover an "Overview of the NMLS Call Report" which includes what is expected/who needs to submit these reports, implementation of receiving reports and uploading capability by company, requirements of various reports (i.e. broker vs. banker), and what are some of the false rumors about the Call Report? For more details or how to get set up to "attend," contact Susan DeMars at susan@cmba.com.
The folks at FICO Labs are coming out with a new way to predict the likelihood a borrower will default, even if they can afford their mortgage. Predicting strategic defaults is the goal, with a strategic default being where borrowers, who can afford their monthly mortgage payment, opt not to pay it - often because they owe more on the home than it is worth. FICO Labs believes that the strategic default borrower is one with a reputable credit score, low levels of revolving credit, little retail balance and a short occupancy in their current residence. By these characteristics, the strategic borrower is money conscious, has a low probability of past defaults and has little attachment to their property. FICO reports that borrowers whose homes lost the most value are only twice as likely to default as those who lost the least value. And just how much impact does a short sale or foreclosure have on FICO scores? Apparently the magnitude of the impact is highly dependent on the starting score, but there's no significant difference in score impact between short sale/deed-in-lieu/settlement and foreclosure. FICOStudy.
LO compensation issues continue to be questioned. "I continue to believe that Congress and the President do not understand the industry, so their efforts to place preventive measures end up being overkill. This has turned very abusive to borrowers and in my opinion will be very detrimental to the housing recovery. I was here when TIL and RESPA came into existence. But removing the right to determine one's compensation for labor creates several problems. First, this is a socialistic idea, not an idea this country's ideals are based upon. Second, there is no data showing compensation caused harm to consumers any more than not getting the best price for new car or consistently paying more for a gallon of milk at a convenience store. Third, compensation has nothing to do with value provided - in the mortgage industry different investors and wholesalers will price the same product differently. Shouldn't the borrower benefit from this? Fourth, loan scenarios are all as different as fingerprints, and some take much more time and expertise to close. Pricing flexibility allows the originator to be compensated for their time and expertise in helping these borrowers and provides value to a buyer who otherwise would continue to rent. Should a roofing company be paid the same for every roof it replaces? Fifth, it prevents lenders and originators from reducing their fees preventing their ability to deliver the best customer experience by preventing them from paying rate lock extension fees, appraisal inspection fees, or any number of concessions that need to be made for the consumer in their loan process."
The bond market closed early on Thursday, and was closed on Friday - often not a great environment for anyone needing to lock in a loan. And indeed today we find rates slightly better than Thursday's closing prices. We have an average amount of scheduled economic news this week, starting with New Home Sales today and Consumer Confidence tomorrow. Wednesday may be a little more interesting with Durable Goods and the FOMC statement (released at 12:30PM) and the first post-FOMC press conference from Chairman Bernanke (2:15PM EST) along with $99 billion of Treasury supply hitting the market (Tues through Thursday). Thursday we'll see the advanced Q1 GDP report & Pending Home Sales, and on Friday Personal Income & Consumption for March, along with the Employment Cost Index, Chicago Purchasing Manager's Survey, and the Michigan Sentiment numbers.
With these issues in mind, in addition to the continued debt issues abroad and the march of oil and gold prices and weakness in the dollar, the 10-yr is down to 3.38%, and agency MBS prices are better by about .125.
A man is driving along a highway and sees a rabbit jump out across the middle of the road. He swerves to avoid hitting it, but unfortunately the rabbit jumps right in front of the car. The driver, a sensitive man as well as an animal lover, pulls over and gets out to see what has become of the rabbit. Much to his dismay, the rabbit is dead. The driver feels so awful that he begins to cry.
A beautiful blonde woman driving down the highway sees a man crying on the side of the road and pulls over. She steps out of the car and asks the man what's wrong.
"I feel terrible, "he explains, "I accidentally hit this rabbit and killed it."
The blonde says, "Don't worry."
She runs to her car and pulls out a spray can. She walks over to the limp, dead rabbit, bends down, and sprays the contents onto the rabbit.
The rabbit jumps up, waves its paw at the two of them and hops off down the road.
Ten feet away the rabbit stops, turns around and waves again, he hops down the road another 10 feet, turns and waves, hops another ten feet, turns and waves, and repeats this again and again and again, until he hops out of sight.
The man is astonished.
He runs over to the woman and demands, "What is in that can? What did you spray on that rabbit?"
The woman turns the can around so that the man can read the label. It says..
"Hair Spray - Restores life to dead hair, and adds permanent wave."
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