Residential Lenders Go Into Personal Loans; Regulations Driving M&A; Cordray Addresses TRID Fears
Quicken Loans, besides raising $1.25 billion in debt (leaving folks wondering if that is what attorneys to fight HUD & the DOJ cost these days), released its April Home Price Perception Index (HPPI) and Home Value Index (HVI). On a national level, the HPPI for April indicated that appraiser home value estimates is 0.69 percent below homeowner opinions, the index was 0.40 percent a month earlier. April is the third consecutive month where appraiser opinions are below homeowner opinions.
SoFi, which got its start financing and refinancing student loans, went into residential lending last year and a couple weeks ago began offering personal loans.
And loanDepot announced that it has also begun to offer both home loans and personal loans.
Maybe the non-depository industry is realizing that it is easier to make personal or commercial loans than dealing the increasing regulatory burden on their backs? And on the consumer's wallets? SNL Financial reports that as of April 30, there had been 88 M&A deal announcements in the banking sector (vs. 81 at the same time last year) for a median price-to-tangible book ratio of 142.82% (vs. 137.96% at the same time last year).
Sticking with depository banks, a new one is a rarity. But that was announced with Primary Bank in the Northeast, due to launch this summer. On the flip side, when was the last time we saw a bank closure? Edgebrook Bank, Chicago, Illinois, was closed last Friday and Republic Bank of Chicago, Oak Brook, Illinois, assumed all of the deposits.
Just in the last week it was announced that Achieva Credit Union ($1.2B, FL) will acquire Calusa Bank ($166mm, FL) for $23.2mm in cash. The parent company of American State Bank ($746mm, IA) and American Bank ($280mm, IA) will acquire Community Bank ($42mm, IA). Bank of the Ozarks ($6.8B, AR) will acquire Bank of the Carolinas ($386mm, NC) for $65mm in stock. First Bank ($2.4B, TN) will acquire Northwest Georgia Bank ($282mm, GA). Park Bancorp, Inc. (Chicago, IL) has agreed to merge with Parkway Bancorp, Inc. (Harwood Heights, IL). Baylake Bank ($1.0B, WI) will acquire Union State Bank ($91mm, WI) for $9.7mm in cash and stock. Hanmi Bank ($4.2B, CA) said it will close 4 branches (3 IL, 1 VA) as it seeks to reduce expenses and enhances efficiencies going forward. Union Bank & Trust ($7.3B, VA) will close 7 branches in VA that are inside grocery stores, in an effort to improve efficiencies. KeyBank ($92B, OH) will close 1 branch in AK.
Pacific Coast Banker's Banc's Steve Brown observed that, "It seems regulatory rules are driving mergers both large and small... Regulatory pressure abounds, which one reason new rules to help community banks are trickling out of DC. Raising the asset size threshold for community bank holding companies to $1B from $500mm is one. This higher threshold is expected to cover 89% of all US bank holding companies and it should have a big impact on capital raising activities at community banks....The aggressiveness displayed by small- and mid-size banks to find new partners is in part linked to the Fed's move on the asset-size threshold front. The change enables smaller financial institutions to take on debt to complete mergers and acquisitions and this changes the landscape. According to the Fed, the statute does so by allowing smaller banks to exceed debt limits to finance mergers and acquisitions.
More than 20 percent of banks preparing to comply with the new TILA-RESPA Integration Disclosure Rule - or TRID - will not offer certain mortgage products if the vendor's systems are not ready, according to a recent survey from the American Bankers Association. The association sent the survey data to the Consumer Financial Protection Bureau in a letter today and requested a "hold harmless period of enforcement and liability for those acting in good faith." It turned out that 79% of surveyed banks could not verify a precise delivery date, or were told that they would not receive systems before June, ABA said in the letter to CFPB. According to the survey, only 9 percent of the compliance systems had been or were expected to be delivered by the month of April. In the letter to CFPB, (it was) emphasized the potential negative impact of TRID implementation. "The rules will significantly reshape the housing-finance market, which comprises a substantial proportion of our country's gross domestic product and touches the lives of nearly every American household," said Davis.
Click here for the full survey results.
The American Banker published a story titled, "CFPB's Cordray Confident New Mortgage Disclosures Won't Be Disruptive." "A new mortgage disclosure regime due to take effect on Aug. 1 is unlikely to cause closing delays, according to Consumer Financial Protection Bureau Director Richard Cordray. Under the new disclosures mandated by CFPB, homebuyers must receive the new closing disclosure three days prior to the closing. Lenders fear if they must make changes to the document, it could effectively cause a delay in closing. But Cordray insisted that wouldn't be the case. 'The three-day requirement should not interfere with a successful closing, as some have claimed,' Cordray said. 'The timing of the closing date is not going to change based on any problems you discover with the home on the final walk-through, even matters that may change some of the sales terms or require seller's credits,' Cordray said.
"There are only three circumstances that would delay a closing: an increase to the annual percentage rate by more than one-eighth of a percent for fixed-rate loans or more than one-fourth of a percent for variable-rate loans; the addition of a prepayment penalty to the loan; or a change in the basic loan product, such as moving from a fixed-rate loan to a variable-rate loan.
'That is it,' Cordray said. 'We recognize that various other things can and do change in the days leading up to the closing, so the rule makes allowances for those ordinary changes without delaying the closing date in ways that neither the buyer nor the seller may be able to accommodate very easily.'"
This prompted an industry observer to write to me saying, "The American Banker article on Cordray's speech to the Realtors about TRID set me off today. Rather than asking the Realtors to be patient and cooperate with a new Rule intended to help consumers, the Director told them not to worry, that it won't cause any problems. So, if I'm a Realtor listening to him I think, 'Great, it's business as usual and these lenders are just a bunch of Chicken Littles.' This is despite the CFPB receiving detailed information from the industry highlighting over a dozen significant issues including concerns about the delays and challenges many lenders and consumers will face at the closing table due to the impact last minute changes may have on Loan Estimate and Closing Disclosure tolerances and delivery requirements. Not to mention data showing that readiness is still a big challenge for many participants.
"Either the Director has no idea how Realtors react when they find out they were falsely reassured, or he wanted to avoid discussing TRID's problems and fully plans to offer a grace period to address the Rule's holes. The agency can't possibly be so arrogant as to really think the Rule will not create the problems industry has identified...., or can they? I heard he left without taking any questions."
(I will continue with agency updates tomorrow - I figured this banking & CFPB news was more pressing.)
We closed the 10-year risk free T-note Wednesday at a yield of 2.28% - certainly lower/better than the 2.50% forecasts by some. And plenty of folks who forecast yields of 1.50% are wondering about how best to re-state their opinions... But there is no real certainty that the market was stabilizing yet. We began with lower rates Wednesday due to lower German bund yields and further weakness in the U.S. from Retail Sales, Import Prices, and Business Inventories). We faded off through the day, however.
This morning we've had Initial Jobless Claims and the Producer Price Index. PPI was expected to be +.2% and it was -.4%. The latest tally on initial jobless claims came in at 264,000, beating expectations and near a 15-year low. The four-week average of claims is now at the lowest since April 2000. Economists were expecting that jobless claims rose to 273,000 from 265,000 the prior week. After this we're at 2.25% on the 10-yr.
Jobs And Announcements
Union Home Mortgage, a privately-held lender, is currently seeking a VP of Secondary Marketing who is looking to be a valuable member of the Senior Management team. Headquartered in Strongsville, Ohio, UHM is led by industry leader, Bill Cosgrove, the 2015 MBA Chairman. This successful candidate will be in charge of running day to day secondary operations including, pipeline and interest rate risk management, managing best execution and working with an outside advisory firm. We are pursuing executives with the ability to grow with us as we double our current production of $150 million per month over the next 18-24 months. This person must have experience selling to FNMA/FHLMC (cash and MBS) as well as, GNMA securities. If you want to join a company with a successful track record as a retail lender and be a part of an expanding wholesale and correspondent channel contact, Lucas Engle. Relocation assistance available.
On the retail side MB Financial Bank is searching for retail mortgage branches and loan officers. Nationally chartered MB Financial Bank currently has opportunities in 45 states for Retail Branch Managers and Loan Officers - contact Mark Mazzenga, Mortgage SVP and National Sales Manager, to see how you could become a part of MB. "The MB strategic advantage has always been our people. Our leadership team has extensive retail branch experience, and is dedicated to growing and nurturing MB's retail presence nationwide. We provide you competitive compensation, quality benefits, internal training, marketing support, servicing portfolio leads, and generous tiered commission compensation plans - all to promote your success." MB Financial Inc. is the Chicago-based holding company for MB Financial Bank, N.A., which has approximately $16 billion in assets and a 110-year history of building deep and lasting relationships with middle-market companies and individuals. It is an Equal Employment Opportunity/Affirmative Action employee (Minority/Female/Disabled/Veterans). Equal Housing Lender and Member FDIC. NMLS#401467.
On the correspondent side M&T Bank is searching for an AE to cover its western territory comprising the states of WA, OR, CA, ID, MT, WY, UT, CO, NM, AZ and NV. The ideal candidate will be experienced in third party sales, government products and renovation lending. M&T is a top ten 203(k) servicer and also focuses on FHA 203(b), VA, USDA and HomeStyle lending. M&T, a $96 billion commercial bank that is over 150 years old, is headquartered in Buffalo, NY. Interested candidates may apply at mtb.com/careers; reference Job Code 3D0U4. Or, contact Jim Ahrens.
And in wholesale news, congrats to a whole slew of folks at Parkside Lending, a national wholesale and correspondent lender. Its sales team has been beefed up with Al Comeau (MD & DC), Cynthia Buckman (TN), Danielle Tilley (Orange County), Gary Szymanski (WA), Greg Stallings (North & South Carolina), Kay Muchler (MI), Martha Satterfield (Austin TX), Matt Dunder (MN & WI), and Terri Koubeck (FL). Parkside still have open positions Senior Account Executives in the following markets: Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Massachusetts, Mississippi, Ohio, Oregon, Texas, Utah, Virginia, and E. Washington/Montana. Parkside also has openings in key operational areas (Client Service Reps, Underwriters and Condo Specialist) that can be located in any of its 5 satellite offices or potentially be remote from home. "Parkside is known for helping its clients close more loans with a sensible approach to underwriting, an innovative suite of mortgage products, and proprietary technology - and because we don't serve the retail channel, our clients can be confident that we will not compete for their customers." Interested parties should contact Rick Nelson or apply at Parkside Lending.
There are some interesting products & companies evolving out there.
Roadrunner Solutions is operating a free service to help lenders connect their pre-approved borrowers with local Real Estate professionals that will reinforce the relationship with the borrower. "Roadrunner has a large network of Realtors that will respect the relationship between the LO and their borrower. Roadrunner 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. E-mail us for more information.