Sales of Mortgage-Servicing Rights Jumped in 2018

Wall Street Journal writer Ben Eisen reported last week that, “The mortgage-market slowdown is stirring up interest in a humdrum segment of American home lending: the rights to the arcane task of handling monthly payments.

Sales of so-called mortgage-servicing rights jumped 14% in 2018 from a year earlier, according to industry research group Inside Mortgage Finance, to more than $600 billion of loans backed by Fannie Mae ,Freddie Mac and Ginnie Mae. In the final three months of 2018, the servicing changed hands on loans worth $183 billion, up 27% from the previous year.

Mortgage servicers, in addition to collecting a borrower’s installment and passing it on to the loan owner, take care of duties like ensuring taxes and insurance are paid. If the borrower defaults, the servicer is the first to jump into action. The company that services a mortgage used to be the same as the one that made the original loan, but in recent decades those two crucial housing market functions have separated.”

The Journal article noted that, “The increase in servicing transfers is the latest ripple effect from a slowdown in the housing market, which has forced lenders to slim down, consolidate or close up shop.

“Many of the sellers are independent mortgage lenders that don’t have deposits to fund themselves or other lines of business that can help them withstand a downturn. Stronger players—both banks and nonbanks—have been picking up servicing rights from weaker lenders that need to raise cash.

“The industry shakeout stems from a sharp decline in refinancing activity as rates have risen and a drop-off in new purchases.”

Mr. Eisen added that, “Lenders don’t need a borrower’s consent to sell a loan or servicing right, and the terms of the loan don’t change when they’re transferred. The risk for homeowners is that they end up with a servicer they don’t like or trust—and didn’t sign up to work with when they took out the loan.”

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Swine Feedlot Proposal Draws Opposition in Minnesota

Jennifer Bjorhus reported last week at the Minneapolis Star-Tribune Online that, “A Fillmore County farmer who sought to build the county’s largest animal feedlot has withdrawn his permit application in the face of sustained local opposition, marking the end of the road for the proposed Catalpa Ag hog farm.

“State pollution officials said Monday that Al Hein informed them of his decision via e-mail, and that it terminates his application.

“Hein, the majority holder in Catalpa Ag, wanted to build a piglet operation with nearly 5,000 pigs on his farm near Mabel, Minn., in southeastern Minnesota. The operation would have been managed by Iowa-based Waukon Feed Ranch.”

The Star-Tribune article noted that, “The feedlot ignited unusual local alarm, drawing large crowds at two informational meetings held by the Minnesota Pollution Control Agency (MPCA) and a record number of comments during the agency’s public-comment period. Area residents and others expressed concern that the 7.3 million gallons of liquid manure the pigs would produce each year would threaten their groundwater. They pressed the MPCA to require a full environmental review of the proposal and said that southeastern Minnesota, with its porous karst geography, was the wrong place for the large operation.

“Manure is a source of nitrate, a form of chemical salt that can cause health problems in drinking water, and an estimated 15 percent of the private wells in Fillmore County exceed the safe drinking water standard for nitrate.

“In December, the MPCA took the rare step of denying Hein’s application for a general permit, citing concerns that the karst geology was too sensitive to contamination.”

Ms. Bjorhus pointed out that, “Hein applied again, this time for an individual permit, a customized document that would have likely included additional protections for water resources. Most of the state’s 1,300 state-permitted feedlots are covered under general permits, according to the MPCA.

“Hein did not respond Monday to a request for comment, and MPCA officials declined to discuss what prompted his decision.”

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60-Day Comment Period for WOTUS Rule Launched

DTN writer Todd Neeley reported yesterday that, “The 60-day public comment period for the newly proposed waters of the United States, or WOTUS, rule launched Thursday with the EPA and U.S. Army Corps of Engineers publishing the rule in the Federal Register.

“The new rule moves forward while the 2015 rule under the Obama administration remains in legal limbo and essentially in effect in 22 states.

“EPA and the Army Corps are on track to finalize the new rule by September, which is likely to trigger a new round of legal challenges.”

Mr. Neeley explained that, “The publication of the new rule already has drawn praise and outrage from a number of interest groups. The public comment period closes April 15.

“In a statement to DTN, American Farm Bureau Federation President Zippy Duvall said the group supports the proposal.

“‘Today’s release of a new draft Clean Water Rule is a major step toward fair and understandable water regulation on America’s farms and ranches and other working lands,’ Duvall said. ‘We haven’t yet examined every word of today’s proposal, but even a quick look shows many of the previous rule’s worst problems are on their way out.'”

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Bayer’s Monsanto, Sued by Thousands, Faces New Kind of Claim

Bloomberg writers Lydia Mulvany and Deena Shanker reported yesterday that, “Monsanto Co. has been sued by thousands of farmers and others who blame their cancers on its massively popular Roundup weedkiller. Now Germany’s Bayer AG, which bought the agriculture giant last year, faces a claim that it deceived home gardeners about Roundup’s impact on their gut bacteria and their health.

“The lawsuit, filed Wednesday in federal court in Kansas City, Missouri, claims that labels on products such as Roundup’s Weed & Grass Killer falsely assured consumers that they target an enzyme not found ‘in people or pets.’

“According to the suit — which names three consumers as plaintiffs seeking unspecified monetary damages and class action status — Roundup’s active ingredient glyphosate attacks an enzyme also found in the beneficial intestinal bacteria of humans and some animals.”

The Bloomberg writers noted that, “The Roundup products at issue are distributed by Scotts Miracle-Gro, which is also named as a defendant. Two other suits, in Wisconsin and Washington, D.C., are based on similar arguments but aren’t class actions.

“Daniel Childs, a spokesman for Bayer, said in an emailed statement that the lawsuit is without merit and that the company ‘looks forward to defending the case on the merits.’ A similar suit filed by the same lawyers in Wisconsin was denied class certification because they failed to prove the intended class members had even seen the labels, Bayer said.”

Yesterday’s article also stated that, “In August, a jury in a California state court awarded $289 million in damages, later reduced to $78 million, to Dewayne Lee Johnson, a former school groundskeeper who claimed Roundup significantly contributed to his terminal non-Hodgkin lymphoma. The company’s share price plunged, erasing $16 billion in market value in a week.

Bayer has said that U.S. courts will ultimately find that glyphosate isn’t responsible for Johnson’s cancer. Monsanto has said for decades that glyphosate is safe.”

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Fed Governor Calls for Regulators to ‘Develop and Refine’ Supervision of Community Banks

Earlier this week, Wall Street Journal writer Lalita Clozel reported that, “Federal Reserve governor Michelle Bowman called Monday for regulators to ‘develop and refine’ how they supervise community banks ‘to fit the smaller size and less-complex risk profiles of these banks.’

‘I witnessed firsthand how community banks were significantly affected by the global financial crisis, a crisis they did not cause,’ said Ms. Bowman, a former small-town banker and regulator from Kansas, in her first speech since joining the Fed’s powerful board of governors in November.

“Congress passed a law in 2015 requiring that the seven-seat board have at least one member with ‘demonstrated primary experience working in or supervising community banks having less than $10 billion in total assets.'”

The Journal article stated that, “It is ‘crucial,’ she said, to ‘balance effective regulation and supervision to ensure the safety and soundness of community banks while also ensuring that undue burden does not constrain the capacity of these institutions to support the communities they serve.’

“Speaking Monday at an American Bankers Association conference in San Diego, Ms. Bowman enumerated continuing efforts backed by the Fed and other regulators to ease capital rules, examination and other compliance requirements for smaller banks.

“Ms. Bowman highlighted some risks facing community banks, including concentrations in agricultural credit and credit-risk-prone activities.”

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Next Wave of ‘Unicorn’ Start-Ups Looking Very Different

New York Times writer Erin Griffith reported earlier this week that, “Technology start-ups worth $1 billion, once as rare as unicorns, are now plentiful enough and old enough that there’s a new generation behind them — one that looks very different.

“Silicon Valley’s current crop of highly valued tech start-ups, which include now-household names like Uber and Airbnb, all benefited from the spread of smartphones and cheap cloud computing. Many of these companies built global empires by simply taking existing businesses — like taxis, food delivery and hotels — and making them mobile. Some of the start-ups became giants: Uber, for instance, may reach a $120 billion valuation this year.

“But as those companies have matured and prepare to go public, the easy opportunities for disrupting old-line industries are drying up. Now, many of the up-and-coming start-ups that may become the next unicorns have names like Benchling and Blend. And they largely focus on software for specific industries like farms, banks and life sciences companies.”

The Times article noted that, “Software start-ups may seem boring. But many of them are growing fast because industries like agriculture require more software tools as they adapt to the tech era, said Jason Green, an investor at Emergence, a venture capital firm that invests in cloud software companies.”

This week’s article also pointed out that, “Other fast-growing start-ups that fit this description include Farmers Business Network, which was founded in 2014 by Charles Baron, a former Google program manager, and Amol Deshpande, a serial entrepreneur and venture capitalist. The company charges farmers $700 a year to share and analyze data about their farms, buy supplies and sell crops. Mr. Baron said the start-up counts 7,700 farms as customers and has raised nearly $200 million in funding.

A company like Farmers Business Network wouldn’t have been possible 10 years ago, before the proliferation of cloud computing and the ‘digitization’ of farming processes, Mr. Baron added. Now, farms produce a lot of data, which Farmers Business Network is helping them to process and use to make decisions.

‘Agriculture is going through a digital revolution,’ he said.”

The Times article added that, “CB Insights identified five companies in India, four in China, and three in Latin America as possible candidates to reach $1 billion in valuation. They ranged from CargoX, a Brazilian start-up using technology to make trucking companies more efficient, to Deputy, an Australian company that provides tools to businesses to manage their hourly workers.”

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Bipartisan Group of Senators Introduce Startup Act

A news release today from Sen. Jerry Moran (R., Kans.) stated that, “U.S. Senators [Moran], Mark Warner (D-Va.), Roy Blunt (R-Mo.) and Amy Klobuchar (D-Minn.) today reintroduced the Startup Actbipartisan, cutting-edge legislation to encourage job creation, grow entrepreneurial activity, increase innovation and advance economic development.

“The Startup Act would accelerate the commercialization of university research and creative inquiry that can lead to new ventures, review and improve the regulatory processes at the federal, state and local levels, and modernize a critical Economic Development Administration (EDA) program to spur economic growth and promote innovation. The widely-supported legislation also creates both entrepreneur and STEM visas for highly-educated individuals so they can remain in the United States legally to promote new ideas, fuel economic opportunity and create good-paying American jobs.

“‘America continues to fall behind in new business development and struggles to retain top talent that could grow our U.S. economy,’ said Sen. Moran. ‘With a renewed sense of urgency, Congress must prioritize policies that will help recruit and retain highly-skilled students and innovators, bolster a pro-growth environment and enable entrepreneurs to transform ideas and research into companies and products – creating meaningful, good-paying jobs for Americans in the process. Thank you to Senators Mark Warner, Roy Blunt and Amy Klobuchar for continuing to prioritize this important legislation to help make certain America remains the best place in the world to bring an idea to market and grow a business.'”

The release added that, “Data shows that international students studying in the U.S. on temporary visas accounted for nearly two-fifths of all Ph.D.s in STEM fields – that number has doubled over the past three decades. Further, international doctoral students were significantly more likely than domestic students to major and earn degrees in STEM disciplines in the U.S.”

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Farmers Getting a Service Akin to Uber to Deliver their Grains

Financial Times writer Emiko Terazono reported today that, “US farmers are getting a service akin to Uber to deliver their grains and oilseeds, with the launch of a transport unit by agritech start-up Indigo Ag.

Sellers and buyers of crops can hail trucks through a mobile app on iOS and Android, and enrolled truck drivers can identify and select loads. Indigo Transport is available across the leading crop regions in the US — Midwest, Southeast, Northeast and South — and the company takes a transaction fee for loads delivered on the service.

“Growers who are commercially licensed and own trucks can also sign up as carriers on the Indigo platform, turning underutilised assets into new sources of income.”

The FT article explained that, “According to Indigo, the US agriculture transportation market is the third largest sector within the US transport industry, moving 800m tonnes of crops a year and is worth $7.5bn. However, sourcing transportation remains inefficient and time intensive with limited price transparency.

“‘Shippers of agricultural products – including growers, food processors, grain elevators – are faced with a time-intensive and often unreliable sourcing process,’ said the company.”

Posted in Agriculture Law, Start-up Company Law | Comments closed

USDA Extends Deadline for Farm Trade Aid to Feb. 14

Reuters writer Humeyra Pamuk reported yesterday that, “U.S. farmers now have until Feb. 14 to apply for federal aid designed to offset the impact of retaliatory Chinese tariffs on American crops, the U.S. Department of Agriculture said on Monday, after delays caused by the month-long government shutdown.

“The previous deadline for the aid program, officially known as the Market Facilitation Program (MFP), was Jan. 15. But a partial 35-day government shutdown that ended last Friday had delayed the application and payment processes for the aid.

“‘If you are a farmer or rancher whose commodities have been directly impacted by tariffs, you now have until February 14 to submit your application,’ USDA said in a tweet.”

The Reuters article explained that, “The Trump administration last year pledged up to $12 billion in aid to help offset some of the losses for crops hit by retaliatory Chinese tariffs imposed in response to Washington’s tariffs on Chinese goods.

“A USDA spokesperson on Monday said the department has as of Monday paid out a total of $5.94 billion to farmers in trade aid, with the top five commodities that received aid being soybeans, corn, wheat, dairy and sorghum.

“The top five states that received aid were listed as Illinois, Iowa, Kansas, Minnesota and Nebraska.”

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Application lets Farmers Price Grains Real-Time to Manage Risk

Bloomberg writer Mario Parker reported last week that, “A firm that sprouted from Sam Altman’s tech incubator is betting that while farmers are increasingly reliant on analytics to boost yields what they really want is new ways to market their crops.

FarmLogs initially focused on an application that allowed growers to monitor crop health, risks and efficiency on their smartphones and tablets. Now, Chief Executive Officer Jesse Vollmar says it’s offering AutoHedge, which lets farmers price their bushels real time to manage risk.

“‘It’s really kind of putting the power of a hedge desk in the pocket of the farmer,’ Vollmar said by telephone. ‘It’s really critical that farmers pay attention to their marketing.'”

The Bloomberg article noted that, “The same technology that’s disrupted industries from retail to media is also rippling through the agricultural supply chain. Farmers have more information at their fingertips than ever before, connected by industry-specific applications and social-media platforms. Last fall, agribusiness giants Archer-Daniels-Midland Co. and Cargill Inc. announced they were forming a technology venture called GrainBridge that would allow farmers to execute transactions on their own schedules.”

Mr. Parker added that, “‘Grain marketing is the new frontier for innovation on the farm,’ Vollmar said. ‘We’ve been in an environment where margins are thin and if you don’t run your farm like a professional, chances are you’re probably not going to be able to continue farming for that long.'”

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