MReport June 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

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42 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION ORIGINATION LOCAL EDITION Wells Fargo Growth Restrictions Lifted THE BANK RECENTLY REMEDIED DEFICIENCIES FOUND IN ITS RESOLUTION PLAN ISSUED IN 2015. CALIFORNIA // The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board recently announced that San Francisco-based Wells Fargo had remedied the deficiencies in its 2015 resolution plan. Wells Fargo will no longer be subject to the growth restrictions which were imposed last year. The Dodd-Frank Act requires resolution plans, commonly known as "living wills," to de - scribe the company's strategy for rapid and orderly resolution under bankruptcy in the event of mate- rial financial distress or failure of the company. The FDIC and the Federal Reserve Board found that in December 2016, Wells Fargo had not yet remedied two of the three deficiencies the agencies had previously identified. Subsequently, the agencies im - posed restrictions on the growth of Wells Fargo's international and non-bank activities. The revised plan submitted by Wells Fargo in March adequately repaired the two deficiencies. "Earlier today, the Federal Reserve and the FDIC announced that Wells Fargo's Revised Submission adequately remedied the remaining deficiencies," said Wells Fargo in a statement. "We are pleased with the agencies' findings and remain committed to sound resolution planning and preparedness as we finalize our July 2017 submission." By July 1, Wells Fargo must file a new resolution that will address vulnerabilities to orderly resolution as noted in guidance issued by the agencies last year. If the vulnerabilities noted in the guidance are not satisfactorily ad - dressed, the agencies may jointly determine that the plan is not credible or would not facilitate an orderly resolution under the U.S. Bankruptcy Code. The deter - mination made in April by the agencies pertains solely to Wells Fargo's 2015 resolution plan and not to any future resolution plan. According to the FDIC, "the decision received unanimous sup- port from the FDIC and Federal Reserve boards." PHH Officially Exits Private Label Fulfillment LENDERLIVE WILL ASSUME THE ORGANIZATION'S FULFILLMENT EFFORTS IN JACKSONVILLE, FLORIDA. FLORIDA // LenderLive Network LLC, a mortgage services pro- vider, announced on April 10 that it had completed its transaction with PHH Mortgage Corporation. LenderLive has now assumed PHH's private label fulfillment op- erations in Jacksonville, Florida. Late last year, PHH Corp an- nounced that it was backing out of the private label fulfillment business and planned to turn its operations over to LenderLive. The transaction was previously announced in February, and PHH will outsource loan processing, underwriting, and closing activities to LenderLive until the contracts with its current clients served out of Jacksonville have been transi - tioned and/or completed. "We are excited about the op- portunity of adding a significant number of talented mortgage pro- fessionals and establishing a new operations center for LenderLive in Jacksonville," LenderLive CEO Rick Seehausen said in February. "The arrangement accelerates our long-stated imperative of driv- ing scale and operating leverage in our private label Mortgage Solutions business." In addition, LenderLive has brought on a majority of the PHH employees from the fulfillment area. The facility has been rebranded as LenderLive. Throughout this year, clients requiring outsourced fulfill - ment services will be transi- tioned to LenderLive. Another benefit of the agreement: The Jacksonville operations center will allow LenderLive to expand its operations to meet the demand for services from its current and future clientele. "We look forward to wel- coming our new associates and demonstrating the benefits of our platform and business model to PHH clients," Seehausen added. "This is a win-win for everyone involved." Flagstar Sees Q1 Revenue Bump THE BANK SAW MORTGAGE REVENUES JUMP 19 PERCENT FOR THE QUARTER. MICHIGAN // Troy-Michigan based Flagstar Bank is see- ing growth across its mortgage service lines, according to the Q1 2017 earnings report released by the bank in April. Flagstar's commercial real estate loans jumped 11 percent from Q1 2016 and 58 percent from Q 4 2016. The bank's mortgage revenues are also up, rising 19 percent for the quarter. In all, Flagstar's mortgage revenues grew by $10 million over Q 4 2016. This number includes gain on sale and return on MSR. Though interest rates were up and the bank's warehouse loans were down, Flagstar President and CEO Alessandro DiNello said growth in other areas helped overcome those hurdles. "We had another good quarter with solid results, despite facing the headwinds of seasonality and higher interest rates in our mort- gage business," DiNello said. "Our community bank came through again as a solid contributor to net interest income where strong growth in commercial real estate and commercial, industrial, and mortgage loans partially overcame a decline in warehouse loans. We also saw continued growth in retail deposits at an attractive funding level." Returns on the bank's mortgage servicing rights also helped keep Flagstar in the black. The bank sold $65 million fair value in MSR assets. It will sell another $200 million in assets during Q2 2017. "We saw strong returns on the mortgage servicing rights we hold, reflecting the stronger market we are seeing in this rate environ - ment," DiNello said. "In the first quarter, we sold $65 million of our mortgage servicing rights. In the second quarter, we have entered into pending bulk sales of an additional $195 million of mortgage servicing rights under contract at a break-even price, including transaction costs. We have retained servicing on ap- proximately two-thirds of the total MSR sale amount." DiNello said the bank's growth in the mortgage sector was also helped by two recent acquisitions: that of Stearns Lending and Opes Advisors. "We remain committed to con- tinuing to grow our community bank and solidifying our position as an industry leader in mortgage banking," DiNello said. "Looking ahead, we believe we are well "We had another good quarter with solid results, despite facing the headwinds of seasonality and higher interest rates in our mortgage business." —Alessandro DiNello, President and CEO, Flagstar

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