Bank M&A Momentum; Puts and Calls in Hedging; Should Realtors Help with Remodeling?

"I've decided to sell my Hoover ... well, it was just collecting dust". While we're talking about dust, if you think the drought in California is only a problem for pool owners and golf courses, think again - especially when you go to buy a head of lettuce or a bunch of carrots and the price is 10% higher than a year ago. Yes, look for crop prices to be impacted.

Besides campaigning there is little going on in Congress, but the Mortgage Bankers Association along with other industry trade groups urged the Senate to pass H.R. 5461, which would add corrections to the Dodd-Frank Act and improve upon the definitions provided for points and fees. H.R. 5461, which recently passed the House with strong support, contains four proposals that would rectify inadvertent consequences of the Dodd-Frank Act.  The legislation contains the text of three bills that were previously approved by the House, the Business Risk Mitigation and Price Stabilization Act, the Mortgage Choice Act, the Restoring Proven Financing for American Employers Act and the Insurance Capital Standards Clarification Act that recently passed the Senate. If H.R. 5461 passes, the Dodd-Frank Act would provide the same exclusion for affiliated title insurance changes from the 3% points and fees cap in the Ability to Repay rule as title insurance from an unaffiliated company.

And rumor has it that at some point the House is poised to vote on legislation amending the Dodd-Frank Act to allow higher charges for homebuyers in some transactions and exempt some collateralized loan obligations from bank trading limits. The House likely will consider the changes under rules that require two-thirds of its members to approve them. House Democrats previously have supported the CLO changes and other measures.

Real estate agents are often pressured to close a sale on time so they make promises they can't keep. They may even go above and beyond their call of duty but in doing so, may face unforeseen repercussions. The law offices of Peter N. Brewer (a California firm that publishes attorney blog articles pertaining to the real estate industry, the link to their website can be found here) posted an article about potential pitfalls for real estate agents assisting in home improvement projects and although it's hard to determine how much liability real estate agents have, the firm explains the law and provides some guidance on this topic.

Most realtors may have been in the position where the seller or buyer wants to fix up the property to stage it or want the property in move-in condition. In California, any individual who performs, or offers to perform construction work must be licensed during the duration of the work. The rule also applies to anyone acting in the capacity of a contractor. According to the Contractors' License Law, the term "contractor" includes "any person who undertakes or offers to undertake to construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, or other structure, project, development or improvement." If a California court found that a real estate agent acted as a contractor as part of the services he offered, the real estate agent could lose his commission.

In order to reduce any penalties a real estate agent may face when it comes to assisting clients with home improvements needs, the law firm suggests agents never contract with a contractor/sub-contractor/repairman, etc. The owner of the property should be responsible for doing that. Agents should also never directly pay the contractor/sub-contractor/repairman nor should they oversee projects. Your clients are responsible for contacting the contractor/sub-contractor/repairman directly.

vendor, investor, and lender updates

Apparently the VA has spread the word that the Funding Fee must be included in the 36 month recoup calculation.

M&T Bank is accepting deliveries of mortgage loans where electronic mortgage application documents are present in its new esignature policy.

StoneHill Group has launched a new software solution to help mortgage bankers meet their growing compliance requirements at all stages of the loan cycle. LES (Loan Evaluation Software) is a web-based tool that can be fully customized to help mortgage bankers manage risk while reducing time-in-file costs.

Sun West Mortgage Company is accepting HECM Loans with non-borrowing spouse. HECM Loans with non-borrowing spouse must comply with all FHA's requirements.

U.S. Bank Home Mortgage has improved its LPMI "Piggyback Buster" pricing on its plans #3684: 80-01%-85% LTV, #3685: 85.01-90.0% LTV, and #3686: 90.01-95.0% LTV.

Kinecta Federal Credit Union is reminding clients that Fannie Mae's discontinuation of the HomePath Mortgage product is effective October 7, 2014. Kinecta will not accept HomePath loan submissions received after October 15, 2014. To access the alert use link below: https://www.kinecta.org/Broker/wholesale_lending_manual.aspx.

Enrolling in the MAA is FREE and lasts for ONE CALENDAR YEAR. Join the Mortgage Action Alliance (MAA) and unite with other mortgage professionals all around the country.

Sunwest Mortgage Company posted information regarding new counties in Michigan that have been declared by FEMA as Major Disaster Areas including Macomb County, Oakland County and Wayne County. For loans submitted with an appraisal dated on or before the incident period end date or for those submitted without an appraisal, Sun West will require an interior and exterior inspection prior-to-funding or purchase of any loans with subject properties that are determined to be at risk.

Envoy Mortgage CLD announced the rollout out of its new mandatory commitment program. Qualified lenders can choose from mandatory whole loan forwards as well as bulk commitment options. "Now lenders who hedge and execute with mandatory commitments can enjoy the industry leading personal touch customer service that our valued best effort lenders have come to respect. Visit http://www.envoycld.com to learn more or contact a regional account manager in your area.

First Community Mortgage Wholesale is reminding clients regarding the retirement of the Fannie Mae Homepath product effective on applications or sales contracts dated after October 6th. All Homepath loans currently in its pipeline must be closed and funded no later than October 30th. A clarification memo regarding income verification SSI/SSDI was also posted.

Flagstar Lending Wholesale updated MERS Deed of Trust and a new MERS Deed of Trust Rider Form 3158 for the states of Montana, Oregon and Washington for loans closing on or after October 15, 2014. Also noted, beginning with loans locked on Friday, October 3, 2014, Flagstar Bank will be making price adjustment updates to the applicable Jumbo Fixed and ARM products.

Franklin American Mortgage Company's National Bulletin 2014-29 includes updates on Conventional Products - Internet Documentation, Rural Property Investment, VA Jumbo Maximum Loan Amount and Water Purification Systems, FHA & VA DU Release Notes, Conventional, FHA & VA LP Liabilities Enhancements, Student Loans - IBR Plan & Clarification Deferred Student Loans, All Products POA & VVOE and Clarifications Incidental Cash Back TX.

Mountain West Financial Wholesale announced the CHF Sapphire program will follow standard MWF guidelines for maximum DTI requirements, including those for Manual Underwriting.

"Rob, my Secondary guy mentioned puts and calls for hedging a pipeline earlier this week. Have you heard anything recently about this?" I still help lenders with capital markets issues but back when I was doing secondary, we did our best to stay away from them. They were known as "commission intensive trades", liquidity was poor, every day counted against time value, etc. But companies tend to make up their own minds about them, and there was a recent piece from MCM on them that is a good primer.

Let's face it: the markets hardly moved yesterday, which is fine with many given the volatility of the last week or so. At the end of last week the 10-yr T-note was at 2.20%; yesterday it sat around 2.22% most of the day. We do have some news of note today, however, with weekly Jobless Claims (at 283k +17k from a revised +266k), the FHFA house price index (+0.1% last print), and September's Leading Economic Indicators (expected higher). The 10-yr is hovering around 2.26% and agency MBS prices are worse about .125.

Jobs, M&A, Announcements

Castle & Cooke Mortgage LLC is expanding and actively seeking highly skilled branch managers and their teams! "CCM is one of the few lenders in the country that is a direct Fannie/Freddie/Ginnie seller/servicer, which means amazing speed and control of your files. CCM is known to be a fantastic platform for incredible turn times and is committed to being a market leader in products, technology, and service. You and your branch staff will be backed by state-of-the-industry software, marketing, and training resources. The position reports directly to the SVP and requires at least 2 years in branch management experience. Candidates being considered for this position will be subject to additional background checks as required. Please contact Christopher Jensen or Jim Hoggan for further information.

On the Ops side of things, MegaStar Financial Corp., a FNMA and GNMA approved lender headquartered in Denver, Colorado is seeking Senior Underwriters. "If you have at least five years of underwriting experience, have your DE, SAR, and USDA designation, and can work efficiently in a paperless workflow environment; we would like to talk to you about joining our fast paced progressive team." Please forward your confidential resume to mpieper@megastarfinancial. com.

Lastly, EMAC Recruiting Academy announces the launch of the Mortgage Recruiters Forum. Membership provides access to all recent and upcoming LIVE workshops from veteran Headhunters Jim McGrath and Ben Robinette. Register today and start to review our interactive webinars from the popular Mortgage Recruiting Boot Camp Series; featuring best practices, stories from the trenches, the latest recruiting tools, and much more delivered straight to your desktop. It is part of the on-going Mortgage Recruiting Boot Camp series helping companies looking for talent to attract and close more top tier candidates for 2014 and beyond.

Yes, there are plenty of jobs out there but not all is rosy in the financial biz. Last Friday the FDIC and state regulators closed NBRS Financial located in Rising Sun, Maryland. Howard Bank over in Ellicott City stepped in to take it over. First Niagara Bank ($38B, NY) said it will close 17 branches as it adjusts to a customer shift toward more digital banking and a resulting decline in branch traffic. Cross County Bank ($204mm, AR) has withdrawn its regulatory application to acquire Forrest City Bank ($54mm, AR). North Carolina's BB&T ($184B) said it will eliminate 800 jobs or about 2% of its workforce, as it seeks to reduce costs.

But certainly the announced mergers and acquisitions continue, and there are plenty of rumors of more of this in the non-depository mortgage banking industry. AmericanWest Bank ($4.0B, WA) will acquire Bank of Sacramento ($468mm, CA) for about $60mm in cash. Wintrust Financial ($19B, IL) will acquire Community Bank CBD ($206mm, WI) for about $38mm in cash & stock. In Kentucky First Southern National Bank ($668mm) will acquire First National Bank of Muhlenberg County ($149mm). Starion Financial ($1.1B, ND) will acquire WPS Community Bank, FSB ($98mm, WI). In Nebraska Pinnacle Bank ($3.9B) will acquire Home State Bank ($83mm). Down in Florida Harbor Community Bank ($695mm) will acquire First America Bank ($266mm).

First Tennessee Bank ($24.0B, TN) will acquire TrustAtlantic Bank ($446mm, NC) for about $80.0mm in cash and stock. In California Pacific Premier Bank ($1.9B) is buying Independence Bank ($408mm) for about $71.5mm in cash and stock. In Florida Harbor Community Bank ($695mm) is snatching up First America Bank ($266mm). In the Cornhusker State Pinnacle Bancorp, the parent company ($7.7B) of Pinnacle Bank in TX, WY and NE and Bank of Colorado will acquire Home State Bank ($83mm). ServisFirst Bank ($3.8B, AL) will acquire Metro Bank ($212mm, GA) for about $41.2mm in cash and stock.