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On The Mend

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CoreLogic released its June National Foreclosure Report, which provides data on completed U.S. foreclosures and foreclosure inventory. According to CoreLogic, for the month of June 2014, there were 49,000 completed foreclosures nationally, down from 54,000 one year prior, a year-over-year decrease of 9.9 percent. However, on a month-over-month basis, completed foreclosures were up by 2.7 percent from the 48,000 reported in May 2014. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 5.1 million completed foreclosures across the country.

As of June 2014, approximately 648,000 homes in the United States were in some stage of foreclosure, known as the foreclosure inventory, compared to 1 million in June 2013, a year-over-year decrease of 35 percent. The foreclosure inventory as of June 2014 made up 1.7 percent of all homes with a mortgage, compared to 2.5 percent in June 2013. The foreclosure inventory was down 3.9 percent from May 2014,representing 32 months of consecutive year-over-year declines.

“While 32 straight months of year-over-year decline in the foreclosure rate is cause for celebration, the total number of homes still in the foreclosure process remains almost four times as high as the average in the early 2000s,” said Mark Fleming, chief economist for CoreLogic. “Additionally, there is concern over whether or not we can maintain this pace of improvement as the foreclosure inventory becomes more concentrated in judicial states with lengthier, more complex processes and timelines.”

“The national inventory of foreclosed homes fell for the 32nd straight month to just under 650,000 in June.  Most of the U.S. has reduced its shadow inventory to pre-recession levels, but the Northeast, Florida and the Pacific Northwest remain elevated,” said Anand Nallathambi, president and CEO of CoreLogic. “The great news here is that the basic underpinnings of the housing market are strengthening, but there is still work to do.”

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10 Questions For Hillary Clinton

In the past few weeks, it has been impossible to turn on the television without seeing Hillary Clinton in situations where she is supposedly being interviewed. I used the word “supposedly” because these interviews have a tiresome air of predictability – the questions being asked are stale and often silly, and her answers offer no meaningful insight into how she views the world around her.

Now, I can’t imagine that Clinton’s handlers would allow me within a mile of her. But if they did and I had a chance to pose some questions, this is what I would love to ask her.

1. Under your husband’s presidency, the Glass-Steagall Act was repealed. During the past year, a growing number of high-profile individuals – most notably Sen. Elizabeth Warren – have called for the reinstatement of this legislation. As president, would you bring back the Glass-Steagall Act, or would you follow your husband’s lead on the issue?

2. Also during your husband’s presidency, efforts to increase homeownership rates – particularly among minorities – was aggressively encouraged by weakening underwriting standards. Without making that same mistake again, how would you encourage the responsible expansion of minority homeownership?

3. In the aftermath of the 2008 crash, the Obama Administration has failed to bring forth a single indictment of any Wall Street executive involved in this economic catastrophe. As president, would you continue the Obama policy of aiming for settlements with major financial institutions while declining to press charges against the executives responsible for these institutions’ actions?

4. At no point during the Obama Administration has the White House taken the leadership position on ending the federal conservatorship of Fannie Mae and Freddie Mac. As president, how would you bring about the federal conservatorship of these entities – or would you point to their profit-making abilities as the reason to keep them in indefinite conservatorship?

5. Also on the subject of Fannie Mae and Freddie Mac: the chief executives of both government-sponsored enterprises earn higher annual salaries than the president. Do you believe that the Fannie Mac and Freddie Mac leaders deserve to have higher salaries than the nation’s chief executive?

6. At no point during the Obama Administration has the White House called for the expansion of the Fair Housing Act to protect LGBT Americans from housing discrimination. As president, would you actively work with Congress to bring about this legislative protection?

7. During the past few years, a number of municipalities have flirted with the idea of using eminent domain laws to seize and repackage the mortgages of distressed homeowners. Are you supportive of this strategy – and, if so, would you actively encourage municipalities to pursue this as a means of strengthening their local housing markets?

8. In recent weeks, employees of the Consumer Financial Protection Bureau (CFPB) have brought forth charges of racism within the agency’s personnel policies. To date, no Democratic leader has publicly expressed outrage over the nature of the charges. As the de facto frontrunner for the 2016 Democratic Party nomination for president, are you willing to publicly comment on the charges raised against the CFPB by its employees?

9. And one more CFPB-related question: CFPB Director Richard Cordray earns a higher salary than Vice President Joe Biden and Supreme Court Chief Justice John Roberts. Do you believe it is fair for the CFPB director to have a salary higher than the nation’s second-highest leader and the head of the Judicial Branch?

10. At no time during your recent public appearances have you made any comments on housing. What are your thoughts on the state of the nation’s housing policy, and what level priority will your presidency devote to housing-related issues?

Yeah, they are not the sexiest or funniest questions – but if Hillary Clinton is going to get my vote, I would like to know where she stands on these issues. If she wants to answer me, she can drop me a line courtesy of this website. But if she doesn’t want to speak to me – well, it won’t be the first time that I’ve been ignored!

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CoreLogic Explores The New Normal In Housing

CoreLogic released its July issue of MarketPulse. In this report, CoreLogic economists, led by Chief Economist Dr. Mark Fleming, analyze current housing market conditions, including homeowner occupancy trends driven by low interest rate loans and the lack of desirable inventory – the “new housing normal.” Here are some of the findings:

In a feature article focused on natural hazard risk to residential properties, CoreLogic Senior Hazard Scientist Dr. Tom Jeffery explores property risk associated with hurricane-driven storm surge. According to his research, more than 6.5 million properties are at risk of storm surge representing nearly $1.5 trillion in potential reconstruction costs.

Other key findings in the CoreLogic July MarketPulse report include:

>> Home sales across all price points are beginning to suffer, with stale demand moving from lower-priced homes to middle- and upper-priced homes as well.

>> Half of all major metropolitan areas will reach negative equity parity by 2018.

MarketPulse article content consists of a selection of recently published CoreLogic research, analytics and commentary. To view additional content, please visit the CoreLogic Insights Blog: http://www.corelogic.com/blog.

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When Will The Summer Lending Boom Happen?

After the winter slowdown, a lot mortgage executives were hoping that things would pick up. Certainly things are better, but if June was any indication, things aren’t that much better. The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for June 2014 shows mortgage applications for new home purchases decreased by 5 percent relative to the previous month.  This change does not include any adjustment for typical seasonal patterns.

By product type, conventional loans composed 67.2 percent of loan applications, FHA loans composed 17.0 percent, RHS/USDA loans composed 1.2 percent and VA loans composed 14.6 percent.  The average loan size of new homes decreased from $296,427 in May to $296,078 in June.

The MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 386,000 units in June 2014, based on data from the BAS.  The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.

The seasonally adjusted estimate for June is an increase of 3.2 percent from the May pace of 374,000 units.  On an unadjusted basis, the MBA estimates that there were 36,000 new home sales in June 2014, unchanged from 36,000 new home sales in May.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country.  Utilizing this data, as well as data from other sources, MBA is able to provide an early estimate of new home sales volumes at the national, state, and metro level.  This data also provides information regarding the types of loans used by new home buyers.  Official new home sales estimates are conducted by the Census Bureau on a monthly basis.  In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

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Some Lenders Are Expanding

The good lenders are expanding. For example, Churchill Mortgage is expanding its nationwide presence and opening two new branches in Phoenix and Columbia, Md., located at 11811 N. Tatum Blvd., Suite 3031 and 7120 Minstel Way, Suite 206A, respectively. The lender is a leader in the mortgage industry providing conventional, FHA, VA and USDA residential mortgages across 33 states.

Debbie Schmidt will manage the Phoenix branch with 13 years of mortgage industry experience. A licensed Realtor®, she previously served as an originator for LendSmart in Phoenix, where she was a member of the company’s Top Team for Most Fundings in 2013.

Churchill also welcomes Mary LangdonJohn OwensStephen Rust and Andrew Schmidt as home loan specialists, who bring nearly 50 years of combined mortgage expertise. In addition, Churchill adds Steve Engen and Deborah Reeter as processors and Sarah Hagar as a home loan consultant and transaction coordinator. In addition to Phoenix, the branch will serve borrowers in the surrounding cities, including Avondale, Chandler, Goodyear, Mesa, Scottsdale and Tempe.

Kraig Spence will lead Churchill’s Columbia branch. Previously, Spence served as a home loan specialist for the lender’s Herndon, Va. branch, where he was inducted into the company’s President’s Club in 2013. Prior to Churchill, he was a retail branch manager for Newday USA, where he generated more than $13 million in annual revenue and was recognized as Loan Officer of the Year in 2003 and 2011. In addition, Spence was a six-time inductee into the President’s Club at Newday USA and has been a member of the Virginia Bankers Association for nearly 15 years.

Churchill also welcomes Lisa German and Katherine Wilson as processing team leaders, bringing over 30 years of combined mortgage expertise. The branch will serve borrowers in Columbia and the greater Baltimore-Washington, D.C. metropolitan area.

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Zeros And Heroes

The mortgage world and the housing industry is more than just a jumble of data and a wash of dollars and cents – it is a whirl of personalities that drive trends, shape perceptions and create both results and disasters. This week, my column takes a look at some of the more interesting individuals that are having an impact, both for better and worse. And to celebrate the joys of gimmicky journalism, I am giving the designation “zero” to those that are creating problems and “hero” to those who have done work deserving praise.

Zero: Julian Castro. We all know why the young and telegenic San Antonio mayor was tapped to become the next HUD chief, and it has absolutely nothing to do with his extraordinary accomplishments in housing or urban development. This is not the first time that HUD is being used to give instant prominence to a rising political player – remember Andrew Cuomo and Mel Martinez? – and Castro’s appointment reaffirms the Obama Administration’s continued refusal to take housing issues seriously.

Hero: Shaun Donovan. In order to accommodate Castro’s ascendancy into the Washington elite, the current HUD head is being kicked aside to run the White House’s Office of Management and Budget. This is a shame because Donovan was the rare HUD leader that actually tried to do his job without falling victim to scandal or using the office for self-promotional purposes. Yes, Donovan’s record was lacking in significant triumphs – but considering the low priority that the administration has given to HUD’s mission, the fault cannot be rested solely at Donovan’s feet.

Zero: Brandon Friedman, HUD’s deputy assistant secretary for public affairs. On June 4, Friedman took to Twitter to comment on the controversy surround the recent swap of jailed Taliban leaders for long-missing Sgt. Bowe Bergdahl. Yeah, why is a HUD bureaucrat talking about this? Even worse, Friedman sought to smear Bergdahl’s former comrades after they publicized the circumstances surrounding Bergdahl’s disappearance. Friedman tried to justify Bergdahl’s alleged desertion when he tweeted: “Here’s the thing about Bergdahl and the Jump-to-Conclusion mats: What if his platoon was long on psychopaths and short on leadership?” Another tweet by Friedman suggested that Bergdahl’s platoon mates were liars. Excuse me while I vomit.

Hero: Trey Garrison of HousingWire. Friedman’s disgusting Twitter remarks would have been ignored by the mortgage trade media had it not been for the excellent reporting of HousingWire’s senior financial reporter. At a time when most trade media is either cutting or pasting press releases or rewriting what other media sources are reporting, Garrison caught an astonishing story and forced Friedman to issue a statement clarifying his comments (a non-apology apology, admittedly, but it was better than stony silence).

Zero: President Obama. What did Barry O do wrong now? Well, last week he issued an executive order capping repayments on student loan debt at 10 percent of the borrowers’ monthly income. But talk about too little, too late: the proposal won’t take effect until December 2015, and no economist believes this will make a dent in the more than $1 trillion in federal student loan debt that is now crippling a generation of Americans. Genuine Executive Branch leadership is still lacking here.

Hero: David H. Stevens. The Mortgage Bankers Association leader deserves praise for warning that the student loan debt crisis will wreck the chances for the housing market to enjoy restored stability – not to mention the chances of enjoying a true economic recovery. In a recent CNBC interview, Stevens pointed to the student loan debt situation and stated that “it tells me we still have a ways to go in this recovery.” Stevens also warned CNBC that consumer confidence is still lacking, which is hurting the housing market. “The opportunity to get the market kick-started has to come with increased confidence,” he said. Thank you, Mr. Stevens, for telling CNBC (and the nation) what we need to hear: the truth.

Zero: Redfin Research Center. Earlier this month, the folks at Redfin issued a report that claimed that Bill Gates had enough money to buy all of the housing units in Boston. Why in the world would anyone want to put forth such a stupid report? Says Redfin: “Given that the average American struggles to afford a home, we wanted to illustrate just how many homes the wealthiest among us could buy.” Ah yes, another volley of class warfare in the guise of allegedly calling attention to so-called “income equality.”

Hero: Mayor Martin Walsh of Boston. While the Redfin folks were imagining Bill Gates’ buying up Boston, the city’s mayor has put forth a bold new development initiative designed to bring some much-needed middle-income housing to his city. “Property values are skyrocketing and we need to create more opportunities for home ownership,” Walsh said in a recent interview. “Construction of high-end units have been outpacing those for moderate income, and we have to try to do a better job of balancing that.” Mayor Walsh has the right focus: instead of encouraging envy of prosperous people, he is working to ensure that working people have affordable housing. That makes him a hero in my book!

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Year-Over-Year Foreclosure Rate Falls

According to CoreLogic, for the month of March 2014, there were 48,000 completed foreclosures nationally, down from 53,000 in March 2013, a year-over-year decrease of 10 percent. On a month-over-month basis, completed foreclosures were up 5.9 percent from the 45,000 reported in February 2014. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 5 million completed foreclosures across the country.

As of March 2014, approximately 720,000 homes in the United States were in some stage of foreclosure, known as the foreclosure inventory, compared to 1.1 million in March 2013, a year-over-year decrease of 37 percent. The foreclosure inventory as of March represented 1.8 percent of all homes with a mortgage, compared to 2.8 percent in March 2013. The foreclosure inventory was down 5.1 percent from February 2014,representing the 29th month of year-over-year declines.

“The inventory of homes in foreclosure and serious delinquency status are back to 2008 levels, yet remain elevated from a historical perspective,” said Mark Fleming, chief economist for CoreLogic. “While getting healthier, the housing market is a long way from being fully recovered.  By way of comparison, distressed stock inventories are more than three times higher than the levels of the early 2000s, before the most-recent housing boom and subsequent financial crisis.”

“The pathway to a full recovery in housing is proving to be a very long one, but lower distressed stock levels are one clear indicator that we continue to make slow-but-steady progress,” said Anand Nallathambi, president and CEO of CoreLogic. “Most states have made good progress clearing their foreclosure inventories but states that have a longer judicial foreclosure process such as Florida, New Jersey and New York, continue to struggle with elevated distressed stock inventories.”

Tomorrow’s Lending Strategies

You Can Download This Article As A PDF HERE

There is no denying that it takes a very savvy lender to stay ahead of market conditions. And being savvy means investing in technology according to industry veteran Rick Roque. Rick recently joined LendSmart Mortgage, a national retail, non-depository mortgage lender headquartered in a suburb of Minneapolis, Minnesota. With lending centers in Minneapolis, Phoenix and St. Louis, and offices across the United States, LendSmart is growing its retail production presence in local markets through strategic market acquisitions in target markets. The company places a priority and focus on compliance and local fulfillment in their operations. Their model serves employees and referral partners uniquely allowing for direct access and communication with staff members supporting the underwriting, closing and funding functions within the market itself. Rick explains what will make LendSmart and other lenders successful going forward.

Q: Why did you get into the mortgage space to begin with?

RICK ROQUE: I grew up in the mortgage and housing industries because my father owned a real estate agency up in Vermont. In the late ‘80s and early ‘90s I was exposed to the family business. From there, like many kids who worked for their fathers, you want to carve a separate path. So, I got my undergraduate degree in electrical engineering and I intentionally left the mortgage business and left the housing sector to focus on the high-tech boom from 1995-2001, 2002. At that point, I had started a company that focused on custom CRM solutions. I sold that company in 2003 to my business partner and it caught the eye of one of the top ASP hosting providers in the country, a company called Wizmo. They had raised $30 million dollars or more in venture capital and they were really on the rise. However, they were significantly hindered by the dot-com bust in 2001, 2002, so they had scaled back to focus on hosting Calyx Point. When I sold my company in 2003, they tapped me to head up their business development because I knew the mortgage business, and I had a strong technology background, as well. That was how I got back into the mortgage business.

Q: How do you think the industry has changed since you first got involved?

RICK ROQUE: We’re in what I would consider the third generation of mortgage lending. As I see it, the first generation started with the creation of the GSEs. At that point, products were fairly simple, and the applications were fairly simple. The second generation started when the industry expanded from 200 to 2008. Loan products and technology applications became very complex during this period. I think the third generation started with Dodd-Frank.

Today mortgage lending is being reconstructed to include a banking foundation. Many of the requirements put on banks like capital requirements and liquidity are now being put on mortgage lenders, as well. What we’re seeing is this shift is created a significant cultural challenge. The very first challenge it posed on the non-depository space, mortgage brokers and mortgage banks alike, is in capital requirements.

Q: You’ve been on the technology vendor side, and you are now on the lender side of the business. Which side do you prefer and why? And how do the disciplines cross?

RICK ROQUE: I started on the mortgage side and branched out to the technology side. When I started Menlo I focused really on warehouse lending and mergers and acquisitions, just production growth strategies. I’ve worked with probably more than 15 investment banks between New York and San Francisco in identifying the appropriate firms both in the retail origination side and the technology side, that would be good investments for them to put money into. Regardless of what side of the business you’re in, you have to have an understanding of the way technology can drive your production, can increase efficiencies, can decrease costs and can increase your revenue. From there, as you scale your business, you need access to capital and you need to identify the appropriate growth strategies that would scale your business safely. We’ve recently seen some lenders like RFC grow in a very un-sustainable, unsafe manner to a point where they had a peak of a thousand employees, on July 1, 2013, and now they have under 200. They had almost 60 branches and now they are down to two or three. My hope is to continue working and applying my skillset in all three of those areas, capital, technology and production or retail growth strategies. I want to add value in all three of those areas as I move forward. I don’t want to pick a side because I think it’s too narrow to do that.

Q: You recently joined LendSmart Mortgage. Why did you choose this career path and what do you think separates this lender from others in the market today?

RICK ROQUE: I have had a lot of opportunities to run retail mortgage companies and I have turned down a lot of those offers for a couple reasons. One of those reasons is culture. Second was lack of capital. And the third reason was a lack of good management. Those are the three reasons why I chose LendSmart. When the opportunity presented itself the first thing I looked to was their management and their culture. They have a high employee retention, number one. They don’t have serial turn over by loan officers in branches. Number two, they have a culture of investing in their branches. So, there are actual systems and people in place to help their branches grow. It isn’t just a talking point or a marketing slogan, it genuinely is a systemic focus of the company to help their offices grow.

Also, a lot of the bigger companies have central underwriting and processing, so you end up getting an underwriter in Milwaukee writing a decision on a property in Miami and they don’t really have local market knowledge to be able to assess a borrower’s income circumstance. For example, if they have never looked at a Union borrower and they don’t know how a Union Shop works, they tend to make mistakes in how they evaluate their credit decisions.

LendSmart has agreed to build out their fulfillment platform, underwriting, closing, funding, in the local markets themselves. So we’ve carved out the country into various regions and we’re pushing regional lending centers. In each of our regional lending centers there is underwriting, closing, and funding functions to support the loan officers in those markets in a very local way.

Q: You talk about mergers and acquisitions and I know that’s one of your responsibilities at LendSmart Mortgage. What are the major M&A trends?

RICK ROQUE: I think the branches and/or independent companies that are doing $5-$30 million a month are the most vulnerable today. Obviously the lower in production you go, the more vulnerable you are. Even companies doing $30 million a month or so, might be in jeopardy these days. For example, I was talking to a company yesterday that does $25 million a month in Orange County. They have a net worth of $6 million, $5.5 million in cash. So, they are moderately capitalized, but for them to make the money they’ve made in the last year, they’ll have to double their production because margins have compressed. So, that’s a challenge.

For me, $5-$30 million a month is really the sweet spot right now. There are some bigger plays out there, but those that do $70-$120 million a month in volume, don’t want to be sold. Also, if you are in that $80-, $90-, $100-million a month category they’re kind of faced with the same kind of decision. They are asking themselves: Do I expand or do I sell? The problem is when they sell, they want too much money for the company. So, that’s why my sweet spot right now is in that $5-$30 million a month space.

Q: What’s the biggest problem that mortgage lenders face and how can it be fixed in your opinion?

RICK ROQUE: Number one, they pay their loan officers too much. I think we’re going to see significant compression on LO compensation. You still see a lot of mortgage lenders paying their loan officers 130, 150, 180 base points a deal and that, I believe, will go away. I think that’s going to fall to more industry norms of 100 basis points, 110 basis points. The second big problem is that a lot of lenders are desperate for production because their executive salaries were too high when rates were low. Let me give you an earmark. There should be no manager that makes more than $200,000-$240,000, $250,000 a year, unless you’re tied to production. I believe that lenders need to be reinvesting in the mortgage company. The point that I’m trying to make is that compensation in our industry is completely out of line when compared to most other industries. I believe that until that falls in line, lenders won’t invest in things like technology and attracting quality people that will help them grow that business.

Q: Last question along those lines is, how would you describe the lender of the future?

RICK ROQUE: I’m afraid that the CFPB has an unchecked mandate to relate and to impose both rules and regulations on our industry, and fines for that matter. In the end, that’s going to increase the cost of doing business. As a result of these new rules, lenders will be forced to operate just like banks and other depository institutions. Now, without a serious commitment to technology, which means you spend probably 20-30 basis points on technology, I don’t see how you maintain a healthy mortgage lender.

The next-generation lender needs a real technology roadmap for their company that will integrate sales and operations. Unfortunately, right now there’s such poor technical leadership on the mortgage side. Lenders have to be more sophisticated when it comes to their thinking about technology, simply put.

Also, sales management is grossly lacking, grossly lacking in mortgage lenders today. I believe that you need to have weekly meetings and pull weekly reports. Lenders need to think: Am I drilling down as much as I should? How are my loan officers really doing? How many appointments are they booking? How many Realtors are they talking to? How many loan applications are they generating? The next-generation lender should be asking these questions and they should have the technology to answer these questions at their fingertips.

What am I really getting at? The next-generation lender should have a full understanding of technology and use it to create a fully integrated business that works regardless of new regulations or shifting market conditions.

Insider Profile

Rick Roque is VP of Corporate Development at LendSmart Mortgage and Managing Editor of MortgageCompliance Magazine. Before starting his consulting firm MENLO Company in 2009, Rick was on the management team for Calyx Software where his focus was Sales and Business Development. Today, MENLO Company works directly with mortgage banks and depository institutions on capital fund raising efforts, production expansion goals, mergers & acquisitions and technology adoption planning. He is a national speaker on mortgage market trends, industry forecasts and emerging technologies that best serve consumers.

Industry Predictions

Rick Roque thinks:

1. We’ll fall short of the $1 trillion in originations that the MBA is predicting. I think we’ll come in at $0.8 trillion this year. I also think that rates will hit 5.5%.

2. In my view, there will be 30% fewer mortgage banks operating by the end of this year as compared to those in business right now. We’ll have under 1,500 lenders out there by the end of 2014.

3. I think the costs of compliance will increase by another 10 basis points over and above what lenders are paying today.

4. Lastly, I think Ellie Mae will be sold and will once again become a private company.

Executive Spotlight: Andrew Peters of First Guaranty Mortgage Corp.

Andrew-PetersOne of the most respected leaders in today’s mortgage banking industry is Andrew Peters, chief executive officer of Frederick, Md.-based First Guaranty Mortgage Corporation (FGMC).  Peters took time from his busy schedule to offer his views on where the industry stands today.

Q: How would you categorize the overall state of the U.S. housing market?

Andrew Peters:  Better, but still very slow. We are still seeing a predominance of cash investors in the market and the true first-time homebuyer has not returned to the extent we’d like to see yet.

Q: Over the past couple of years, the mortgage banking industry has been placed under an increased regulatory regimen. On the whole, how has the industry operated under these new regulations and requirements?

Andrew Peters: The industry has done a great job keeping pace with the new regulations and implementation dates, but balance sheets are worse for the wear. Many small- to mid-sized companies are struggling with the cost of regulatory compliance and the compression of margins.

Q: There appears to be a revived interest in home equity lending. Is this a good sign for the industry?

Andrew Peters:  Yes. It means the end buyers see a light at the end of the tunnel as it relates to home values.

Q: Going forward, what do you see as the biggest challenges facing the mortgage banking world?

Andrew Peters: Profitability and capital. The real challenge is whether it is possible for the majority of independent mortgage bankers to keep operating at the break-even level until the purchase market comes back and private capital brings non-agency products into the market.

First Guaranty Mortgage Corp. is online at www.fgmc.com.

Let’s Focus On Some Good Mortgage News

Too often we read stories about bad news with gotcha headlines designed to be salacious and not really informative. Some people in my field think that’s good journalism, but I disagree. We’re all in this together. So in keeping with this philosophy, today I want to tell you about a lender that is doing well and actually expanding in this very tough market.

I just learned that LendSmart Mortgage, a full-service retail mortgage origination firm, has opened a new lending center in Scottsdale, Arizona with additional reach in California, Colorado and Texas. The new lending center is a part of the LendSmart continued growth strategy for 2014.

“As a national retail origination platform, we offer a full range of conventional and specialty products – ranging from VA, 203K rehab loans, jumbo, manufactured housing and reverse mortgages,” said Rick Roque, a leading industry consultant and vice president of corporate development at LendSmart. “Our national retail platform is expanding aggressively in the SouthWest, under the leadership of Brian Seligmiller, as vice president of sales.”

A 14-year mortgage industry veteran, Seligmiller, manager of the lending center, provides leadership to more than 80 loan originators, processors, underwriters and administrative staff at the Southwest regional center. “We forecast closings for this location to exceed $25 million per month by the end of Q2 2014,” he said. “We are committed to measured growth without negatively affecting service levels to our network of realtors, builders and other referral partners.”

Seligmiller decided to join LendSmart because the company “closely fit the environment and principles that my people had become used to and that I expected from a company.” This includes being forward thinking and considerate of new ideas while also being mindful of how risk could affect the business and employees.

“LendSmart is not pretentious and treats its employees as family while planning for the next level of mortgage lending success,” Seligmiller said. “With LendSmart, our focus is to create stronger community and business partnerships by offering events, professional training, continued education classes and more business opportunities to the Southwest region.”

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