Aurora Bales and Sails; Wells Fargo Expands Globally

n the interesting
side, per the FDIC, there were no new banks created in the US in 2011, making
it the first year since at least 1984 that the country has gone without the
establishment of a single start-up lender. The Financial Times reports that none
of the three new banking charters reported by the US FDIC for 2011 were de
novos. That is compared with three de novo banks reported in 2010. (A de novo
bank is a freshly chartered bank that has not been created through the takeover
of an existing institution.)

On the
minus side of things, “Valued Customers, Aurora Bank has made the decision to close its Residential Lending unit
which includes its Correspondent Lending business. Aurora Bank continues to
service its current mortgage customers. We are no longer accepting new loan
registrations or locks.  We are committed to processing locked
applications in the pipeline through to final disposition. Please note that
lock extensions will not be granted.  We will continue to be staffed to
support your needs and ensure a seamless experience for you and your
customers.” (“Seamless”? Words are interesting things…)

On the
plus side, there are expanding companies. Houston’s
First Continental Mortgage Company is looking to aggressively grow their retail
origination channel by adding seasoned retail originators, branches and
company acquisitions. The company has a strong builder presence across the
Southeast, Southwest and the state of Texas and is targeting retail expansion
across this lending footprint. Founded in 2002, it funded approximately $1
billion in 2011 and has Fannie Mae Seller/Servicer and Ginnie Mae issuer
approvals. FCM is financially strong, has significant liquidity and
consistently profitable. Visit for more information and contact Paul
Peters, CMB at to discuss opportunities.

On the
minus side, last week Grand Bank of NJ
was rumored to have been placed under some type of written order. Written
orders do not help mortgage subsidiaries of banks – in this case ICON Residential Mortgage, so we will
see how this plays out.

On the
plus side, last month O2 Funding became
part of New Penn Financial, which is, in turn, a wholly owned subsidiary of Shellpoint
Partners (PA). New Penn is licensed in 41 states and “Its affiliation with
Shellpoint Partners will allow New Penn to continue to originate Agency loans
while expanding its products to include Non-Agency loans” – so thanks
Shellpoint. (If you want more information contact Omar Cantillo at

On the
minus side, Friday the Georgia Department of Banking & the FDIC shut down Global
Commerce Bank – which starting today will be Metro City Bank.

On the
plus side, we’ve become accustomed to the FDIC shuttering banks on Friday
afternoons. I can’t say that every bank ever shut down was under a written
order of some type by regulators leading up to its demise, but it would
probably be a safe bet. There are, of course, varying degrees of written orders
issued by state and federal bank regulators, but one notable success story is
that of HomeStreet Bank’s recent
successful IPO
. Like many community banks, HomeStreet ran into the 2008
buzz saw as construction lending came to a grinding halt and builder defaults
overwhelmed the organization. Shortly thereafter, it was placed under a
regulatory order, which is fatal in the vast majority of such situations – but
in this case, under some new mortgage leadership, its mortgage division was so profitable (twice the average of its bank
peers, which are in turn twice as profitable as independent mortgage banks on
average) and well managed that the regulators gave the bank some time to work
out their troubled loan portfolio
. One industry vet believes that, “The
mortgage division kept the parent bank afloat until HomeStreet was able to pull
off an IPO two Fridays ago – I believe that it is the only community bank that
has been able to recapitalize via the IPO route.” (For more information and the
S-1, go to EDGAR, HomeStreet, Inc., symbol HMST, Washington State.  The
FWP is dated 2/8/12 and the entire S-1 under registration # 333-173980 and
333-179484 dated 02/14/12. The whole story is contained on the first 16

On the
interesting side, it seems Wells Fargo
has decided to expand globally.

Also on
the interesting side is that Banc Investment Daily reports that in California “Kinecta FCU and NuVision FCU announced
their Boards had mutually decided to terminate their merger agreement that
would have created a $4.4B credit union. The amount of time required to get
regulatory approval, integrate the companies and final review were simply too onerous
and too disruptive to their members.”

And lastly,
I received this note: “I found your recent posts regarding Provident’s decision
to no longer accept low-rise condos and limit hi-rise condos to a few specific
markets interesting. In particular, I’m referring to the statements that
Provident, because it offers such low rates, is looking to lower its costs and
improve their execution in the secondary market.  In contrast, InterBank Mortgage, a direct seller who
closed over $1 billion in wholesale last month alone, continues to offer condos
to its brokers/bankers. (For information on getting approved with InterBank contact
Phil Grossfield at

Last week
the commentary mentioned issues with UCDP,
and I received this note: “The problem with the UCDP, supposedly, is the vendor
that FNMA and Freddie contracted with to build the technology and converting
.pdf’s to MISMO was counting on a solid revenue stream. It appears,
however, that most lenders are working with vendors that are already providing
the appraisals in a data format that can easily be piped directly to the UCDP,
obviating the necessity to convert .pdfs. The rumor is that the original vendor
has lagged in the people and technology to have the UCDP functioning as
promised – even the registration process to the portal, which was supposed to
be a 2-3 day process, is dragging on for weeks.” (Editor’s note – I have not
verified this.)

the HUD suit against BofA over, among other things, requiring certain
information on disability income, Barbara Werth of Mortgage Training Today observes, “I just did a case study on that
for my class and the main thing that was in dispute was not that they had to
provide proof of the three years, but that B of A required the doctors to state
the nature of the disability.  They had to list the actual medical
condition and that is what caused the problem.  FNMA guidelines do require
that the 3 years be documented, but nowhere in the guidelines does it state
that the nature of the disability be disclosed or is required.  B of A had
a condition on the loan approval that the actual disability be documented.” For
thoughts write to her at

There is always plenty of blame to go around, and on the agency’s role, or lack
thereof, S.W. from Sovereign writes,
“As many of us who work or worked for the agencies know, another
interesting note on the GSE situation is that if one looks at the book of
business the GSE’s own that was originated to their own underwriting standards,
it is still performing within expectations (I haven’t seen the actual numbers
in about 10 months, but the difference was stark at that time).  In order
to meet the affordable housing goals that Mike mentioned in your commentary
Friday, both agencies began buying private-label subprime pools of loans and
MBS that were issued by entities whose underwriting standards and guidelines
the GSE’s didn’t know, didn’t understand and couldn’t control or influence. I’m
not suggesting that the GSE’s be let entirely off of the hook, but I am saying
that the full picture that illustrates Mike’s points isn’t revealed until one
looks at the performance of the GSE-originated books vs. the performance of the
GSE-purchased books. That’s when the damage of the government Affordable
Housing Initiative mandate really reveals itself.”

Here’s a
nice write up on agency guarantee fees. By the way, for a more in-depth look
at what the future role of the agencies might be like, given the druthers of
FHFA, go to

nothing quite like curling up with a good book on a cold winter night. With
this in mind, the MBA has rolled out the “2010 HMDA Originations Summary DataBook” at a new, lower price
of $475 for MBA members and $995 for nonmembers. “Home Mortgage Disclosure
Act (HMDA) data are the most comprehensive source of loan origination data and
a valuable market intelligence tool. Learn how MBA’s research team can provide
you with timely and targeted HMDA data reports to help you formulate your
business strategies through better understanding of your market, enabling you
to discern business strengths, identify market share and target areas for
improvement. The 2010 HMDA Mortgage Originations Summary DataBook includes a
collection of summary origination reports such as origination totals by state,
origination totals by state and purchaser type, origination totals by
state/loan purpose/loan type and the Top 100 lenders for each state ranked by
origination volume.” Operators standing by:

the biggest economic report this week will be the employment data on Friday, we
have some other thrill-packed numbers first. ISM Services and Factory Orders
will be released today, zip on Tuesday, Wednesday holds the usual
pre-employment-Friday ADP data (on private jobs) and some productivity &
unit labor cost information, and on Thursday is Jobless Claims. The Trade
Balance is also scheduled for Friday. In
the early going, and with things pretty quiet in Europe, we have our 10-yr. at
1.98% and MBS prices roughly unchanged. – View MBS Prices

(Part 1 of 3)
Two Irishmen walk into a pet shop in Dingle, they walk over to the bird section
and Gerry says to Paddy, “Dat’s dem.”
The owner comes over and asks if he can help them.
“Yeah, we’ll take four of dem dere little budgies in dat cage up
dere,” says Gerry.
The owner puts the budgies in a cardboard box.
Paddy and Gerry pay for the birds, leave the shop, and hop into Gerry’s truck
to drive to the top of the Connor Pass.
At the Connor Pass, Gerry looks down at the 1,000 foot drop and says, “Dis
looks like a grand place.”
He takes two birds out of the box, puts one on each shoulder and jumps off the
Paddy watches as the budgies fly off and Gerry falls all the way to the bottom,
killing himself stone dead.
Looking down at the remains of his best pal, Paddy shakes his head and says,
“Sod dat. Dis budgie jumping is too sod’n dangerous for me!”

…(read more)

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