FHA Flipping & VA Update; M&A Sweeps Through MI, Banks, and Large Lenders
"Karma means that I can rest easy at night knowing that all the people I treated badly had it coming." But there is also good karma, and the MBA is creating plenty of it through its free (yes, there is no cost) Mortgage Action Alliance. I receive plenty of comments asking how the Realtors have a powerful lobby and lenders don't and I always encourage the writer to at least sign up for the MBA's MAA. The staff sends out news and action items but don't clog your in-box. In fact, there is no downside whatsoever: you receive news AND you are counted in the MBA's lobbying efforts.
Leslie Girard sent this little "issue" along. It seems that HSBC notified customers to "Have a Merry Christmas and pay your mortgage or we'll take your house." The fun never ends...
"Brother can you spare a dime" brings back thoughts of the 1930's Great Depression. How about 200 billion dimes? JPMorgan Chase & Co., already facing the highest capital surcharge under international rules, may need more than $20 billion in additional capital by 2019 to meet a new Federal Reserve requirement. On a related topic, Reuters reports that "executives at the biggest U.S. banks are sharing notes with each other before their next round of tests with federal regulators. Banks are struggling to figure out what exactly the U.S. Federal Reserve is looking for when it conducts its annual 'stress tests,' which measure how banks will hold up during times of economic turmoil, bank executives, former Fed officials and consultants involved in the process told Reuters."
Thank you to New Jersey's Brian Benjamin for sending along this cool link to all the banks in the United States ranked by total assets! Deloitte reports whole bank buyers in M&A transactions paid a premium of 38% over tangible common equity in 2Q 2014 vs. 30% in 2Q 2013 and 14% in 2Q 2012.
"Rob, do you know of any compliance magazines out there that are timely?" Sure I do. Here you go - it is subtly titled "Mortgage Compliance Magazine" and is produced by long time industry vet Ben Slayton. And hey, if you want to subscribe it is free.
In what many attorneys believe is a very thorough explanation of vendor management, the OCC presented an in-depth description a while back. Check it out. The CFPB has kind of said, "Hey, us too!" and set out some guidelines on vendor management.
The Community Mortgage Lenders of America today announced that "its opposition had effectively defeated a proposed FHA administrative fee - as high as 4 basis points - for all FHA insured loans. The fee had been included in the Senate version of legislation to fund the Federal Government for the balance of the fiscal year. Notably, CMLA was the only association that actively opposed this fee. CMLA's effort was aligned with our mission to exclusively represent small and mid-sized independent and community based lenders. CMLA lobbied the Senate and House Appropriations Committees to drop the fee, which would have been used to fund technology upgrades and improvements to FHA's IT systems. CMLA fired off a letter to the Committees arguing that while FHA's outdated IT systems are in dire need of upgrades, any IT updates should be funded through HUD appropriations - not by a new tax on FHA lenders which would be ultimately passed onto borrowers."
Meanwhile, the Federal Housing Administration's (FHA) Office of Single Family Housing announced that "the temporary waiver of FHA's regulation that prohibits the use of FHA financing to purchase single family properties that are being resold within 90 days of the previous acquisition, expires on December 31, 2014. The waiver applies to all sales contracts executed on or after February 1, 2010, until 11:59 PM, December 31, 2014. FHA deems a sales contract to be executed when all parties to the contract have signed the contract, and the contract is enforceable under the law of the state the property is located. Mortgages that are made on properties in which sales contracts have been executed after 11:59 PM, December 31, 2014, are not eligible for a waiver of the regulation prohibiting property flipping. FHA will not extend the waiver beyond December 31, 2014." To read the original Federal Register notice click here and page down once or twice.
Over at the Veteran's Administration there is more potential news, and it is not good. Ken Bates wrote me saying, "The 2015 VA loan limits are out and there will be a new cap at $625,500 unless the law changes. As the circular states 'in the event' Public Law 110-389 expires on 12/31/14 (which it's set to do) then the rules for the 'Maximum Loan Guaranty' add this new cap. This means some higher costs counties moved down drastically. For example, San Francisco will drop from $1,050,000 down to $625,500 and New York County dropped from $978,750 to $625,500. In the past 2 years the VA has done over 700 loans in excess of $1M and who knows how many loans between $625k and $1M. If this stays as is, those veterans will either need massively larger down payments or just won't' be able to use the program. Considering VA's default rate and Funding Fee cohort year performance, there is no benefit to the government to dropping this limit, yet it hurts veteran home buyers. This particular part of the law was originally set to expire in 2011 but was extended for 3 years to 2014. If you're in a high cost county, contact your Senator or Representative to petition to have this extended again to help our veterans."
And a leading West Coast lender writes, "There is big news out of Washington on the VA Loan Guaranty front. Congress has not renewed the 125% median home price no-down limit. What this means is that in 11 counties in California alone, Veterans will see a reduction in their loan purchasing power by up to $424,500 - 66 counties nationwide. Quoting one of my good associates in the industry and a strong VA supporter, 'These loans have historically been the best performing loans in the industry. Furthermore, reducing these benefits to our men and women in uniform and Veterans across the country sends a discouraging message. These deserving individuals are being negatively impacted, as are the mortgage and housing industries. VA has always taken the position of supporting our Veterans first, and this is the first time in recent memory that this mandate has been circumvented.' Write your Congressman."
There was no news of note yesterday aside from the equity markets tumbling. Rates dropped slightly with the yield on the 10-year commencing the day at 2.22% and ending at 2.17%. As usual, mortgage prices did not keep up with the flight to quality rally in treasuries (due to slight prepayment risk in mortgages) but still improved nearly .250. The markets are focused on falling oil prices and continued concerns regarding Greece.
Today the economic calendar included Retail Sales and Initial Jobless Claims along with a Treasury auction of $13 billion in 30-year bonds today. Retail Sales were +.7%, higher than expected, and Jobless Claims were -3k to 294k. Soon after the news the 10-yr and agency MBS prices are unchanged from Wednesday's close.
Jobs, M&A, Announcements
For jobs today Essent Guaranty is looking to expand its business development team and is currently seeking an Account Representative in Northern California. The Account Representative will team with and work under the direction of an established Account Manager to identify new customer relationships, further develop the existing customer base, and help differentiate Essent in the marketplace. Mortgage Industry experience is preferred and ideally relationships established with banks, credit unions, and mortgage bankers throughout Northern California. This is a unique opportunity to join an established mortgage insurance provider in this newly created role. Resumes can be sent confidentially to careers@essent.us.
And two thousand miles away Triserv Appraisal Management Solutions, one of the fastest growing AMCs in the industry, is actively seeking a Regional Director-Sales for the Midwest region to help continue its "spectacular growth." "With a maniacal focus on risk management and compliance, Triserv provides a differentiated approach to appraisal management which has resulted in a 153% increase in business in 2014. Triserv Appraisal Management Solutions provides lenders with the assurance that all appraisals will be conducted by a Certified and FHA approved appraiser who is local to the market, is paid more than by competitors and who is paid bi-monthly. Additionally, Triserv provides a 100% manual review of all appraisal orders by appraisers who are full-time employees. Triserv is fully integrated with the leading Loan Origination Systems and provides lenders with an annual SSAE-16 audit along with a CFPB/AIR business process audit. Successful candidate will be a seasoned mortgage professional with significant experience dealing with targeted lender's executive management. This position requires a high level of self-motivation and ability to work independently. Triserv offers an excellent compensation and benefit plan." Interested candidates should forward a confidential resume to Joe Bryant.
Reuters reports that "people close to the matter" report that Radian Group Inc. is close to a sale of its financial guaranty business to Bermuda's Assured Guaranty Ltd. for around $800 million. "Radian's financial guaranty business provides insurance and reinsurance of municipal bonds, structured finance transactions and other credit-based risks. Radian has stopped underwriting new business in the unit, and has been working with investment bank Goldman Sachs Group Inc. to explore its sale since last summer. Assured Guaranty is a holding company with business units which insure municipal bonds, structured finance as well as provide reinsurance to other insurers. Assured Guaranty has a market capitalization of $4.2 billion. Radian Group has a market capitalization of $3.3 billion.
Independent mortgage lender Academy Mortgage announced that it has acquired Republic Mortgage Home Loans. "Republic Mortgage aligns well with the operational structure and the service-oriented and people-centric culture at Academy." Republic Mortgage was founded in 1983; is based in Salt Lake City, Utah; and operates 44 branches in 12 states with 350 employees. Academy Mortgage was founded in 1988; is based in Sandy, Utah; and operates more than 160 branches in 48 states with 1,800 employees. (Loan Officers, Branch Managers, branches, and firms interested in growing with Academy should contact National Business Development Manager Cassidy O'Sullivan.)
Also announced was that Mid America Mortgage, Inc. and Houston-based Affinity Lending Solutions, LLC intend to integrate Affinity's production operations and branch network into Mid America's mortgage platform. As part of the transaction, Mid America (formed in the 1940s and licensed in over 40 states with more than 300 employees) will acquire an interest in Affinity's pipeline and certain assets, and offer employment to the employees in Affinity's 14 origination centers. "Mr. Bode anticipates substantial cost savings from combining the two organizations. Cost reductions will come from a variety of sources, including the reduction of overlapping technology and the cost-effective management of vendor relationships and marketing expenses. Further, the utilization of Mid America's proprietary software system, Mortgage Machine, will open doors for Affinity's operations staff...Mid America is expected to benefit from the 21st century marketing strategies currently employed by Affinity with realtors, builders, and affinity groups across the country."
KBW spread the word that Renasant Corporation and Heritage Financial Group, Inc. jointly announced the signing of a definitive merger agreement pursuant to which Renasant will acquire, in an all-stock merger, Heritage Financial, a bank holding company headquartered in Albany, Georgia, and the parent of HeritageBank of the South, a Georgia savings bank.
But bank M&A announcements didn't stop there this week. The Security National Bank of Sioux City ($830mm, IA) will acquire First Trust & Savings Bank ($121mm, IA). In Minnesota Border State Bank ($370mm) will acquire First Advantage Bank ($70mm), and in Kentucky the Lincoln National Bank of Hodgenville ($179mm) will acquire Kentucky Home Bank ($109mm). IBERIABANK Corporation, holding company of the 127-year-old IBERIABANK and Georgia Commerce Bancshares, Inc. ("Georgia Commerce"), holding company of Georgia Commerce Bank jointly announced the signing of a definitive agreement for IBKC to acquire Georgia Commerce via merger. And in Tennessee SmartBank ($535mm) will acquire Cornerstone Community Bank ($412mm) for about $59mm.