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Crazy UWM Bond; Insane house; Tidal Wave of bank buying 😨

By July 29, 2021 No Comments

Prepare for a “tidal wave” of bank acquisitions

In a deal announced yesterday, Citizens Financial to acquire Investors Bancorp in deal valued at about $3.5 billion

However, Citizens has not been active in the acquisitions space for more than two decades, so what gives?

According to bank analysts at KBRA, who are speaking about the market as a whole, the banking industry faces intensifying competition from Fintech, shadow banks and other investors, forcing them to pour more money into technology and ultimately driving a tidal wave of bank mergers.

The analyst released a newsletter on the state of bank financial, which can be accessed here, once you create a free sign-up.

The newsletter also covers the executive order released by the Biden administration this month, which mandates regulators to tighten reviews and increase their scrutiny of proposed bank merger applications. 

The newsletter also reviews early reads by bank managers who think that the order potentially restricts larger bank mergers, meaning there should be no impact on consolidation activity among smaller institutions. 

It’s will be interesting, but the Citizens deal seems like it’s just the tip of the (sales) iceberg.

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UWM securitizes investment properties —> starts major trend without trying

United Wholesale Mortgage is offering its second private-label bond to the secondary market and this one, true to UWM form, is pretty unique.

For one, the deal is to securitize investment properties (!!!!wah!!!!). Since you probably signed up to KBRA bank research using the above line, here’s the link to the KBRA presale report.

The pool comprises 1,208 residential mortgages with an aggregate principal balance of $393.9 million as of the July 1, 2021 cut-off date. 

The underlying collateral includes agency-eligible (100%) loans and while (69.8%) of the pool is designated as ATR exempt business-purpose loans, (30.2%) of “personal use” or cash-out loans have been designated as Qualified Mortgage (QM) Safe Harbor. 

For two, could UWM be at the front of a trend to fund these loans? Language in the KBRA report indicates “yes” so we’ll be keeping a keen eye on the growth of investment properties.

“Non-owner occupied (NOO) issuance has generally represented a modest segment of the private label securities (PLS) market (5-15%), with certain issuers taking advantage of favorable economics in PLS execution relative to investor property loan-level price adjustments levied by GSEs,” the analysis states.

“In January 2021, the Treasury and the FHFA announced amendments to the Preferred Stock Purchase Agreements with Fannie Mae and Freddie Mac, with many of the changes intended to reduce risk exposure at the agencies,” they add. 

“One revision requires a 7% limit on GSE NOO loan acquisitions, which is likely to have a meaningful impact on future PLS volume as originators look for alternative NOO loan buyers.” 

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The interior of this seemingly normal home is friggin’ insane!

Well, this property in Dallas, Texas that’s listed for $989,000 may look like one of those houses on the outside, but once inside it takes a hard right turn from a family-of-four type of home.

“A property unlike any other! With walls, flooring, and ceiling made of concrete, this property can serve as the perfect storage spot for large wine collections, art collections, multiple cars, as well as serving as the ultimate safe house,” the listing on Zillow reads.

 “The building is connected to two electrical grids and also features a natural gas generator that has is powered by two diesel fuel tanks in the event of a natural gas failure, making the chance of power loss a very rare,” which is a BIGGGGG plus for a Texas property.

Why? Because it’s not a home at all, but a former AT&T data center that can ONLY BE USED FOR THAT PURPOSE!

It’s the crazy thing we’ve heard yesterday and yesterday we heard Walmart is sending all of their employees to college!

The 5,786-square-foot property, which sits just north of Interstate 635 and U.S. 75, managed to find its way onto the popular Facebook page “Zillow Gone Wild,” where perplexed fans were throwing out suggestions on what the house might have been before it hit the market. 

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