IL and NY Population Decline, Other State News; Strong U.S. Economy Moving Rates
Lenders in the US should be aware of what’s going on in the United Kingdom’s mortgage community – it won’t make any investor in mortgages feel better about the asset staying on their books. “Trussle, the online mortgage broker, has launched a monitoring service which compares deals with the borrower’s current mortgage each day. If a better deal is found, Trussle will automatically alert the borrower and guide them through an online remortgage (refinance) process.” In Australia there was talk of an “instant mortgage.” Meanwhile, in this country, Costco allows borrowers to compare mortgages through its site, via First Choice Loan Services – a Berkshire Bank company.
State News
A United Van Lines National Movers Study finds that last year IL was the state where the most residents moved out. A whopping 63% of moves there were outbound. IL was followed by NJ, NY, CT and KS who rounded out the top 5 outbound states. Meanwhile, the states seeing the biggest inbound activity were VT (#1 at 68%), followed by OR, ID, NV and SD. (If it were a country, California would be the 8th best economy and the 35th most populous in the world.)
Thanks to Bob Wexler who noted that the Pennsylvania Legislature gave final approval and sent to the governor a substantial amendment to Pennsylvania’s Mortgage Licensing Act, which would establish a brand-new licensing requirement for most residential mortgage servicers. Pennsylvania’s Act 81 of 2017 authorizes the Department of Banking and Securities to license and examine non-bank mortgage servicers to help ensure the rights of homeowners are protected. The Act gives Pennsylvania similar authority as 36 other states. The amendments to the Mortgage Licensing Act will incorporate current federal standards for mortgage servicing that are already established in the marketplace, ensuring that companies doing business in Pennsylvania will work with a familiar and consistent set of rules and guidelines. The department anticipates accepting license applications for non-bank mortgage servicers beginning April 1, 2018, through the Nationwide Multistate Licensing System (NMLS). The deadline for licensing applications is June 30, 2018. Questions about the license and the application process can be emailed to the department at mortgageservicing@pa.gov.
Governor Kasich signed House Bill 199, the "Ohio Residential Mortgage Lending Act". The bill, a working project of OMBA’s for several years, modernizes the licensing and company registration process. All loans secured by 1-4-unit residential property, both first and subordinate liens, will fall under Section 1322 of the Ohio Revised Code, requiring only one company registration and one state license per loan officer. Among other things, all non-depository companies will become registrants, including mortgage banking companies that are currently exempt from registration when lending solely within their federal agency approvals, alleviating the possibility of unknowingly engaging in unlicensed activity. The new law will become effective 90 days from the date of the Governor's signing. There will be no immediate change in the current requirements. Once the law becomes effective, the Department of Commerce Division of Financial Institutions will allow lenders/brokers to operate under the new law without having to make any registration or licensing status changes until the next renewal date.
Wells Fargo Funding will require the following for property addresses in the state of Maine: loans must not be Closed with MERS as nominee on the original Security Instrument. Loans must be Closed in the lender’s name only and assigned to MERS utilizing MERS Mortgage Assignment (Maine) – Form 3749. This is effective for Loans with Note dates on and after January 22, 2018.
The Arizona Office of the Secretary of State amended provisions relating to notary public fees: Arizona Administrative Code Section R2-12-1102. These amendments require a notary public to: keep a fee schedule posted always in a conspicuous location; select a standard fee for a notarial act ranging from “no charge” up to $10; use the template in Exhibit 1 of Section R2-12-1102 when posting fees; and inform the requestor of the service what the fee will be before performing any notarial act.
The Massachusetts Supreme Judicial Court (SJC) has ruled in favor of Cambridge Point Condominium homeowners in the case of Trustees of the Cambridge Point Condominium Trust vs.Cambridge Point, LLC, the community’s developer. According to a statement from the court, condominium developers cannot unreasonably restrict the ability of homeowners to file suits against them. The court rejected the “poison-pill” provisions developers often use to insulate themselves from liability for construction defects, design flaws, and other claims condominium owners might pursue against the developers of their communities. “Although the SJC decision applies only in Massachusetts, we believe that the theory on which it is based—that owners must have the ability to pursue legal remedies against developers—should apply to condominiums everywhere,” said Ellen Shapiro, a partner in Goodman, Shapiro, and Lombardi, LLC. Shapiro and her partner, Henry Goodman, co-authored the CAI ̶ New England amicus brief. “Developers in many states, not just in Massachusetts, are inserting poison-pill provisions in condominium documents,” she noted. “We hope courts in other jurisdictions will follow the SJC’s lead and reject them.”
Wells Fargo reminded clients that in November Texas Proposition 2, Home Equity Loan Amendment 2017, was approved into the Texas state constitution. In addition to Texas law and applicable agency requirements, Loans subject to Texas Section 50(f)(2) must also meet the following Wells Fargo Funding requirements: Applications for Texas Section 50(f)(2) Loans must not be taken prior to January 1, 2018. An application taken prior to January 1, 2018, may not be converted to a Texas Section 50(f)(2) loan; a new application taken on or after January 1, 2018, is required. A Notice Concerning Refinance of Existing Home Equity Loan to Non-Home Equity Loan must be signed and dated by all owners and owners’ spouses at least 12 days prior to consummation.
Capital Markets
Looking back to last week, as expected, the ECB left interest rates unchanged, but the response to Treasury Secretary Mnuchin’s comments on a weaker dollar were the real headline. ECB President Draghi took exception to the comments saying they don’t “comply with the agreed terms” and might force him to change his own policy. In other words, stop talking down the dollar or we will do the same with the euro. Meanwhile, President Trump completely contradicted Secretary Mnuchin, saying, “the dollar is going to get stronger and stronger, and ultimately I want to see a strong dollar.” He added the Secretary’s previous comment were “taken out of context”.
Several factors suggest US inflation may be gaining pace, which could adversely affect bond yields. One manager comments that "markets are not prepared" for an inflation hike. But inflation hasn’t been much for many, many years.
We learned that real gross domestic product (GDP) increased at an annual rate of 2.6% in the fourth quarter of 2017, according to the "advance" estimate released by the Bureau of Economic Analysis. While the headline was lower than market expectations for +2.9%, the details showed that many components experienced strong growth for the quarter. One of the largest components, consumer spending, which accounts for almost 70% of the headline number, increased by 3.8% due in part to post-hurricane auto sales. What brought down the headline number were inventories and net trade. (Net trade declined due to an increase in overall imports in part due to the release of the iPhone X.) For the year, GDP increased by 2.3% in 2017 from 2016 compared to an increase of 1.5% from 2015 to 2016.
New orders for durable goods increased by 2.9% in December, the fourth increase in the last five months. The increase was fueled by orders for transportation equipment which increased by 7.4% and saw a 55% surge in military aircraft orders. Overall, the economic data from last week continue to support the expectations for further GDP growth in the coming quarters, which usually means higher rates.
And thus fixed-income securities remained under pressure and the 10-year note finished the week yielding 2.66%, up 2 basis points from the previous Friday and flat from the beginning of the week. Rates are in a clear upward trend which does not appear likely to substantially reverse course in the immediate near-term.
The main event for this busy week is the FOMC policy statement Wednesday afternoon but no change is expected for the fed funds target rate and there is no press conference at this meeting. Looking ahead, the probability of a hike at the next meeting in March is 77% and the markets will be watching for any changes to the policy statement that may hint at the timing of the next increase.
The economic calendar for this week begins with personal income & spending (both +.4%, as expected, core PCE steady at 1.5% year over year) and the Dallas Fed manufacturing survey. Tuesday sees Rebook same-store sales, Case-Shiller home prices for November, and consumer confidence. Wednesday brings the ADP Employment Report, Employment Cost Index, Chicago PMI, and Pending Home Sales and the Fed announcement. Thursday has Challenger Job Cuts, weekly jobless claims, productivity, and two manufacturing reports. The week wraps up with the Employment Situation Summary on Friday along with consumer sentiment and factory orders. Ahead of all that, and with the solid numbers last week, rates are higher versus last week’s close: the 10-year is at 2.71% and agency MBS prices are worse .250-375.
Products, Jobs, and Training
“DocProbe, one of the nation's premier providers of trailing document fulfillment services, seeks a full time ambitious Senior Business Development Associate in the Northeastern Region, to join our close-knit national sales team. DocProbe strategically works to deliver trailing document services that are customized to our clients’ specific needs. As a Senior Business Development Associate, you will be responsible for generating new business through prospecting and networking, as well as introducing our services to your existing contacts. The position is geared for an exceptional individual with experience in sales to Mortgage Bankers, who possess the drive and ambition to make calls, network, and have the face-to-face visits necessary for success. The ideal candidate is detail oriented, possesses outstanding interpersonal skills, and an established mortgage banker client base within which they can network.” Interested contenders may confidentially submit resume and cover letter for consideration to Sruly Greenwald.
Michigan Mutual, Inc. is excited to announce the roll out of its Fannie Mae Homestyle Renovation product, to include alongside an already impressive lineup of renovation products such as 203k’s and Repair Escrows. Not only does MiMutual offer these products to its Brokers, the team demonstrates how to use them. A step-by-step presentation on the various renovation products offered by MiMutual can be accessed through the Company webpage. Michigan Mutual is also expanding its Wholesale platform and is now licensed to do business in the state of Nevada. Michigan Mutual is currently searching for established Wholesale Account Executives in Michigan and Florida! If you are a successful mortgage professional seeking an opportunity to join a thriving company with superior technology and high touch broker support, please contact National Director of Wholesale Lending, Greg Campbell (810.334.1643) or HR Specialist, Karley Warwick (248.286.9490). Michigan Mutual is an agency direct/seller/servicer/issuer established in 1992 and based in Port Huron, Michigan.
Every lender must conduct servicing QC reviews. But the definition of what constitutes a “good” servicing QC program, and building a comprehensive strategy for meeting these various requirements, can feel like an uphill battle. Subsequent QC, the servicing-focused sister firm to MQMR, takes the challenge out of meeting multiple servicing QC requirements by leveraging the team's extensive experience to build a holistic servicing QC program. Subsequent QC provides ongoing monthly and quarterly audits across multiple areas of interest, as well as targeted audits to address your organization’s individual risk profile. In addition to summary reports of audit findings, Subsequent QC goes a step further to offer advice on defect remediation based on defect trending analyses, best practices and benchmarking rooted in the performance of industry practices and provide recommendations and observations to management to help you continually move the needle on quality in protecting your MSR asset. For more information or to meet at the upcoming MBA servicing conference in Dallas next month, reach out to info@mqmresearch.com.